Why Aldi Is So Cheap, 6 Ways It Keeps Prices Low

By Tricia McKinnon

With many consumers in the United States struggling to make ends meet Aldi is on a tear. The discount retailer is planning to open 100 stores in the United States this year alone, a stunning feat during a pandemic. Aldi is now on target to become the third largest grocery retailer in the United States by store count with only Walmart and Kroger ahead of it. By the end of 2022 Aldi plans to have 2,500 stores in the United States.

Aldi is famous for its low to no frills approach that keeps prices low. Aldi claims that it’s prices are 50% cheaper than traditional supermarkets. Walmart’s former CEO of US operations Greg Foran has even said this about Aldi: "I never underestimate them." “I've been competing against Aldi for 20-plus years. They are fierce and they are good.” If you are curious about how Aldi keeps its prices so low then consider these six actions it takes to keep its low cost image.

1. Shopping carts are available, at a price. If you are shopping at Aldi and want to use a grocery cart it’s going to cost you. You will have to pay 25 cents for it. While some consumers see this as an inconvenience it saves Aldi money. How many times have you seen a grocery store employee walking to all ends of a store’s parking lot trying to locate a cart a customer left near their car or even a bus stop? By paying 25 cents customers are incented to return their grocery cart to the proper place. That reduces the need for Aldi to invest in labour to perform this function. Several grocers have tried to implement a similar policy but abandoned it because customers preferred to have more customer service. But Aldi is sticking to its low cost roots.

2. Private branded products are a mainstay. More than 90% of Aldi’s products are private label. Over time retailers have focused more and more on their private brands because they tend to be more profitable than national brands and can be a way to lure customers in since they are not available at other retailers.

If you want to buy all of your favourite national brands then Aldi is not for you. But in recent years Aldi has added a few more national brands due to customers demand. As Aldi writes on its website: “recently, we have added a limited selection of national brands in addition to our Aldi exclusive brands. We made this decision in response to feedback from our customers, who have strong brand preferences, yet would like to complete more of their grocery shopping at Aldi. We also may carry a national brand if we are not able to procure an exclusive brand product that meets or exceeds the quality and taste of the national brand.”

3. No frills merchandising. Don’t you just love an elaborate in-store display? It captures your attention and may even entice you to buy something you weren’t planning to buy. While this may be your preference Aldi has other ideas about merchandising. Instead of using fancy displays Aldi stocks its merchandise in the boxes they arrive in. This no frills approach makes it easier for employees to restock merchandise quickly, saving Aldi additional store labour costs.