| 5/4/2009 4:07:00 PM | Email this article • Print this article | Aldi makes an East Side entrance
Discount grocer to open May 9 near Byerly's and Cub Foods in Battle Creek
Scott Nichols
news editor
If you happen to be one of those folks stumped by the "paper or plastic" question at your local grocer, then the Aldi store opening at 2050 Suburban Ave. might be for you.
The discount grocer doesn't even give you the option.
It's one of the many ways the German retailer of food products has made dramatic inroads to the U.S. since 1979, continuing to cement its niche as one of the cheapest places to buy the family foodstuffs.
Letting customers either bring their own bags or buy Aldi's reusable ones not only saves on materials, but it also wins accolades from environmentally minded folks.
Of course, the biggest reason Aldi lets customers bring their own bags is its own bottom line, as paper and plastic bags aren't exactly an insignificant expense for grocers, most of whom measure profits in pennies on the dollar. Neither are shopping carts, which Aldi requires shoppers to rent for a quarter.
Moves like this provide Aldi with a "big labor savings," says David Livingston of DJL Supermarket Research in Milwaukee, who adds that Aldi's sales-per-man-hour ratio is about three times that of its competitors.
"That means they need about one-third the sales force of the normal stores doing the same business," he says.
It is through such attention to cost containment that Aldi - like Wal-Mart or Hormel, producer of SPAM - has proven to be more recession-proof than many other companies, as it has opened up 1,000 stores in 29 states since its U.S. beginnings in Iowa in 1979.
Despite the hard economic times, in fact, Aldi continues to be on a tear, opening 100 new stores in 2008. It has also already opened 20 of its planned 80 stores this year, says company spokeswoman Martha Swaney, reached from the chain's U.S. headquarters in Batavia, Ill.
She admits that dire economic times - while tough on any business - tend to also be a great time to attract new customers.
"We have been through recessions before," Swaney says.
While the company has seen a recent surge in new customers, if history is any judge those customers will be returning even as the economy begins to pick up again, she says.
"They stay with us even when the economy rebounds," Swaney says.
Aside from saving on labor costs, by not having staff bag groceries or retrieve carts, there are other secrets to Aldi's cost-conscious success, all waiting to be discovered by those East Siders heading through the doorstep of the metro's 21st Aldi location on May 9 - opening day.
•Instead of thinking bigger is better, Aldi keeps its stores small, averaging roughly 17,000 square feet and four aisles of goods.
•Aldi says it sells more than 1,400 of the most-frequently purchased grocery items, supplying 90 percent of a typical shopper's weekly needs.
•Roughly 95 percent of its stock is cheaper private-label goods in the most commonly-purchased sizes, which the customer retrieves from boxes the product was shipped in.
•Aldi's stores are only open during the most popular shopping hours, typically 9 a.m. to 7 p.m. Monday through Saturday, and 10 a.m. to 6 p.m. Sundays.
•To save on expenses, the chain also eschews common customer draws like coupons or membership cards, services like check cashing or photo processing, or partnerships with banks, pharmacies, or health care clinics.
One thing the company apparently doesn't shy away from is competition. Aldi's Suburban Avenue storefront is quite near upscale Byerly's as well as not far from a behemoth Cub Foods in Sun-Ray Shopping Center.
Indeed, while the East Side's Northeast Neighborhoods Development Company did its best to attract an Aldi to a Maryland Avenue site, talks never finalized, according to executive director Chuck Repke.
But he says East Siders came out ahead anyway, as his nonprofit teamed up with the city to compile even more land, enough for a brand-new Cub Foods, which he says he prefers as it not only employs more people, but also offers more services through nearby storefronts built by Cub's construction contractor.
Swaney said she couldn't comment on why her company decided not to locate on Maryland Avenue, but did note that Aldi prefers to open its stores in already-developed retail areas, all the better to nab customers "already out doing their shopping."
Scott Nichols can be reached at eastside@lillienews.com or at 651-748-7816.
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