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By Andrea Browne Taylor, Online Editor | Updated June 2017
For many shoppers who are serious about spending less on groceries, a trip to discount supermarket Aldi is a weekly ritual. The chain, founded in Germany, credits its rock-bottom prices to low labor and operating costs, a limited selection of mostly inexpensive private brands, and a no-frills store design. Merchandise is often stacked in the aisles and sold straight from the cardboard box it was shipped in. Essentially, it's a grocery store that's the size of a convenience store.
If there isn't an Aldi near you, don't be surprised if one pops up soon. With nearly 1,500 stores already in 32 states (mostly along the eastern half of the U.S.), the discount grocer recently announced an aggressive growth strategy, which it's projecting will usher in 100 million customers per month to its various locations. The strategy includes dedicating $1.6 billion to remodeling 1,300 of its existing storefronts by 2020, as well as investing $3.4 billion to expand to 2,500 stores nationwide by 2022.
Never shopped at Aldi before? Here are 13 things you should know before your first trip.
Trader Joe's Is Part of the Family
Trader Joe's and Aldi are owned by sister companies Aldi Nord and Aldi Sud. Aldi Nord owns Trader Joe's, which it acquired in 1979, and operates Aldi stores in Europe. Aldi Sud operates Aldi stores in the U.S. The first one opened in Iowa in 1976.
Aldi was founded in Germany by brothers Albert and Theo Albrecht. The brand name is a combination of the first two letters of their last name and the first two letters of the word discount. The brothers, now deceased, launched their grocery empire right after World War II, but chose to split the business in 1961 reportedly due to a dispute over whether to sell cigarettes.
It's One of the World's Biggest Retailers
Aldi might not be a household name in the U.S., but it's well known around the globe. In the 2015 Global Powers of Retail Report, which identifies the 250 largest retailers in the world by retail revenue, Aldi ranked eighth globally, finishing ahead of Target and Home Depot. Walmart topped the list; Costco came in a distant second.
In the U.S., Aldi's nearly 1,500 locations outnumber better-known supermarket chains including Whole Foods, Trader Joe's, Publix, Meijer, Food Lion and Giant. Albertsons (thanks to its acquisition of Safeway) and Kroger each operate more locations than Aldi, which plans to open 25 stores in Southern California by July as part of a westward expansion.
You Have to Bag Your Own Groceries
As part of its low-price business model, Aldi keeps a limited number of staff on the clock at any given time (typically just three to five people). This means that certain conveniences common at larger supermarket chains, such as having groceries bagged for you, is the responsibility of the customer.
You'll want to bring your own reusable shopping bags to pack up everything you've purchased. Otherwise, you'll have to buy shopping bags when you're ready to check out. At Aldi, plastic shopping bags can cost 10 cents each, while paper can run 6 cents per bag.
You Need a Quarter to Use a Shopping Cart
While shopping carts at most grocers are free for the taking, Aldi requires a 25-cent deposit to use a cart. The cart rental system is simple: To release a cart for your use -- the carts are chained together -- insert a quarter in the coin slot on the cart and the locking mechanism will disengage. When you return the cart and reinsert the chain, the quarter is returned. (Watch this YouTube clip to see Aldi's cart rental system in action.)
Why all the fuss over a quarter? Aldi says it saves money, which it passes along to shoppers in the form of lower prices, because it doesn't have to pay employees to wrangle stray shopping carts from the parking lot. If you want to avoid the 25-cent deposit altogether, it's OK to bring your own collapsible
Nine Out of 10 Items Are Store Brands
More than 90% of the products found at Aldi stores are private brands, including organic and gluten-free brands. The company gets many of its store-brand products from the same food manufacturers that make name-brand products, says Lauren Greutman, founder of frugal living Web site IAmThatLady.com, meaning quality and taste are often comparable.
Aldi carries far fewer products than a typical supermarket -- 1,300 items versus 30,000 -- so stores are smaller and cheaper to operate, allowing the savings to be passed along to customers. "[Aldi] typically focuses on the most popular product items and package sizes," says Jon Springer, retail editor for Supermarket News magazine.
Shoppers can find a small inventory of name-brand products, too. Name brands stocked by the chain include Coca-Cola, Oscar Mayer, Gatorade and Tide, says Liz Ruggles, the company's director of public relations.
Store Brands Are Cheaper Than Name Brands
Aldi claims shoppers can save up to 50% by switching to its store brands from national brands, based on its own price comparisons. We decided to put Aldi's claim to the test. At a Washington, D.C.-area Aldi, a 13-ounce bag of Clancy's restaurant-style tortilla chips cost 99 cents, while the same size package of Tostitos cost $2.98 at a nearby Walmart. A dozen Goldhen eggs costs 99 cents at Aldi, while a comparable carton of Sunny Meadow eggs totaled $2.48 at Walmart. A 10-ounce container of Little Salad Bar Classic Hummus was $1.99 at Aldi, while Sabra hummus cost $2.98 at Walmart. Bottom line: The three items we priced were 53% cheaper at Aldi than at Walmart.
Everything isn't always cheaper at Aldi, however. Since you can't use coupons at Aldi, Cindy Livesey, founder of Web site LivingRichWithCoupons.com, says you may be able to find better deals on such items as cereal and paper goods at a grocery store that does accept them. This is especially true when you combine manufacturer coupons with supermarket sales.
Not Satisfied? Get a Replacement and a Refund
Aldi's "Double Guarantee" policy is designed to ensure that customers are completely satisfied with their purchases. Say you buy a box of store-brand cereal from the discount grocer and end up hating it compared to your usual name-brand cereal. Simply return the cereal, including original packaging, to the store manager to receive a full refund and a replacement item.
Note that Aldi's guarantee does not apply to certain items including alcohol and national name-brand products.
Multiple Bar Codes Make Checkout Faster
You'll notice that all of Aldi's store-brand products have multiple barcodes on them. This is intentional, says Ruggles, the Aldi spokeswoman. The design allows for a quicker checkout, because Aldi cashiers don't have to waste time searching for a single barcode to scan on each item in your shopping cart.
That's not the only way Aldi shoppers can save time. Since product selection is limited, stores are smaller than traditional supermarkets, and layouts are consistent from store to store, it can be faster to find everything on your shopping list at Aldi.
Checks and Coupons Aren't Accepted
If you're planning a trip to Aldi, remember to leave your checkbook at home. As part of its effort toward speedier checkout, the grocer only accepts cash, debit cards and (as of March 1, 2016) credit cards for payment. Remember, too, that coupons aren't accepted.
If it's any consolation, these restrictions can get you through the line faster since the person in front of you won't waste time filling out a paper check, fishing for an ID or scanning multiple coupons.
Stores Are Only Open During Peak Hours
Aldi locations operate during peak shopping hours, which typically means they aren't open as early or late as larger competitors. The company's rationale: "Staying open later would simply add to labor costs -- and raise our prices."
The Washington, D.C.-area Aldi store we visited operates weekdays from 9 a.m. to 9 p.m.; Saturdays from 9 a.m. to 8 p.m.; and Sundays from 9 a.m. to 7 p.m. The nearby Walmart Supercenter is open daily from 6 a.m. to midnight.
Best Things to Buy: Kitchen Staples
Heading to the supermarket for some basics, say a gallon of milk, a dozen Grade A eggs, a loaf of white bread and a jar of peanut butter? Strictly judging by the bottom line, you may want to give Aldi a shot.
We priced out these four kitchen staples at an Aldi in Northern Virginia, and then compared the everyday, non-sale prices to similarly packaged store brands at three other nearby grocery retailers: Giant, Harris Teeter and Target. Here are the results (from cheapest to most expensive):
Eggs: Aldi, 39 cents; Harris Teeter, $1.39; Target, $1.49; Giant, $1.99
Bread: Aldi, 85 cents; Harris Teeter, 97 cents; Giant, 99 cents; Target, $1.64
Peanut butter: Aldi, $1.49; Target, $1.79; Giant, $2.19; Harris Teeter, $2.29
Milk: Aldi, $1.49; Target, $2.98; Giant, $3.49; Harris Teeter, $3.59
Worst Things to Buy: Non-Food Items
Savings experts say it’s best to steer clear of most toys, home goods, cleaning supplies and other non-food items at Aldi. But if you’re tempted -- every so often, Aldi will score national-brand products and put what appears to be amazing prices on them -- first pull out your smartphone and price-compare.
“Make sure you check the price on these as they tend to be higher prices on lower quality items at Aldi,” says Brent Shelton of money-saving website FatWallet.com. “Plus, you can often find coupons for these types of items at other stores, even grocers, which would make buying them elsewhere a smart thing to do.” Aldi doesn’t accept coupons.
When we compared prices on a roll of paper towels, for example, Aldi’s price of 99 cents was the same as the price at Giant and Target. However, coupons and loyalty discounts could’ve brought down the price more at the latter retailers. (Aldi doesn’t have a loyalty program, either.)
Mixed Reviews: Fruits and Vegetables
Like most of Aldi’s goods, fruits and vegetables are typically sold from the bulk boxes they were shipped in. No fancy, bountiful horn-of-plenty displays. And unlike major chains, the bulk of Aldi’s stores don’t refrigerate produce.
“Produce [from Aldi] can spoil more quickly,” says Tracie Fobes, a money-saving expert at the website Pennypinchinmom.com, “so buy only what you can eat within a few days.”
Also, Aldi pre-packages many of its fruits and vegetables in bulk, so if you want, say, an apple you need to buy an entire bag. Most big supermarket chains sell similar produce loose. The latter approach allows shoppers to pick out the freshest individual items available.
However, Aldi is rolling out changes at new (and newly remodeled) stores aimed at fending off competitors including Whole Foods’ offshoot discount chain, 365 by Whole Foods. On top of better lighting and wider aisles, Aldi’s new store format puts fresh produce center stage and includes refrigerated units for the likes of greens, perishable fruits, and premade soups and dips. Bulk packaging still rules at new stores, but that’s a big reason why Aldi can keep produce prices so low.
Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail email@example.com.
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