In the summer of 2020, I lived briefly in Ithaca, New York.It's the only time I've lived near Aldi, the grocery store known for low prices.
I went twice, and I thought it was fine, but underwhelming.I appreciated the low prices, but it didn't have everything I needed.
The store was small and a bit shabby.I didn't know it yet, but those are the exact ingredients that have made Aldi the fastest-growing grocery chain in America.Per Bloomberg, Aldi plans to have more than 3,000 American locations by the end of 2028, which would be more than any other chain but Walmart.
In 2024, Aldi generated some $29 billion in U.S.sales, which is more than Trader Joe's.Aldi is a German company known for having low, low prices, and it deserves that reputation.
Food reporter Deena Shanker told me that her experience comparison shopping over many months was that Aldi either matched Walmart on price or was a bit cheaper.Grocers like Wegmans and Kroger have announced defensive price reductions, and an analysis published in late 2023 of Lidl, another German grocer with a very similar model to Aldi's but fewer U.S.
stores, found that grocery chains reduced their markups ~7 percent in areas where Lidl stores opened.All to say: Aldi is disrupting the grocery business and actually lowering prices even as the cost of food—at restaurants and other grocery stores—goes up and up.Maybe this sounds a bit humdrum.But I found it totally intriguing and perplexing, because…One necessary but not sufficient explanation for Aldi's low prices is that management is obsessed with efficiency and cutting unnecessary costs.
There's no music in stores, because speakers (and licensing fees for muzak) cost money.The staff places products on shelves still in the cardboard boxes they were trucked in on, because artfully unpacking fruits, bread, and jerky sticks would mean higher labor costs.
The shabbiness is intentional — it's the cost of cheaper groceries.But other grocery chains are similarly obsesse...