shelton_webBy William C. Shelton

(The opinions and views expressed in the commentaries of The Somerville Times belong solely to the authors of those commentaries and do not reflect the views or opinions of The Somerville Times, its staff or publishers)

I’m not someone who gushes over consumer products. I’ve never written about them or the stores that sell them.

Nor do I share the enthusiasm that the two wonderful women that I live with have for Trader Joe’s. I’m put off by its yuppie ambience, and I won’t make the cross-Cambridge gas-guzzling trip required to regularly experience it.

So I was pleased to discover a store just across the Mystic River in Medford that offers products of at least Trader Joe’s quality, but at lower prices and with less pretention. Affluent professionals shop there side-by-side with working stiffs, welfare moms, and immigrants, like Somerville used to be. Its name is Aldi, and it’s Joe’s estranged brother.

Its story began in 1913 when Anna Albrecht started a small grocery store in a working-class suburb of Essen, Germany. In 1946 her sons Karl and Theo took over. By 1960 they had grown the business to 300 stores, at which point they declared their differences irreconcilable and parted ways.

Business history is replete with family rivalries that have killed healthy companies. But sometimes these conflicts have happy endings.

Arthur S. Demoulas is gleefully investing the cash that he extorted, while Arthur T, keeps Market Basket humming. Sisters Abigail Van Buren and Ann Landers both enjoyed successful careers as advice columnists, while not enjoying each other. Adolf Dassler’s Addidas and brother Rudolf’s Puma both remain successful shoe marketers.

So it was with the Albrecht brothers. Aldi, a contraction of “Albrecht Discount,” split in two. Theo Albrecht’s Aldi Nord operated in Northern Germany, and Karl’s Aldi Sud, in Southern Germany. In 1967, Aldi Sud began its international expansion with the acquisition of an Austrian grocery chain, Hofer.

The same year Joe Columbo, whose Los Angeles-based Pronto Market convenience stores were floundering, tried a different retail format. While on vacation in the Caribbean he had realized that Americans’ tastes in food and drink were broadening beyond their current market options. He opened a store called “Trader Joe’s” in Pasadena. I remember visiting it by accident the following year, seized by a blind munchies attack while driving down Arroyo Seco Parkway.

Meanwhile, both Aldies continued their expansion. Aldi Sud eventually spread to Australia, Austria, Hungary, Portugal, Spain, Switzerland, the U.K. and the U.S., and Aldi Nord, to Belgium, Denmark, France, Ireland, the Netherlands, and Poland. Today the two companies operate 9,600 stores, about evenly divided.

I infer that an agreement between the two organizations prohibited Aldi Nord from operating as “Aldi,” in the U.S. So in 1979 it bought Trader Joe’s, and with it, an alias. With new management, the firm expanded operations beyond California and eventually across the country.

Although I for one had never heard of Aldi U.S., an Aldi Sud company, it was growing as well. It now operates 1,300 stores in 32 states, including one at 630 Fellsway.

 

It has succeeded through rigorous cost leadership. That’s one of the two most common strategies by which companies attain high profitability.

It involves offering products that are popular with a large market segment, charging low prices, pumping through huge volumes, and relentlessly lowering costs by pursuing scale economies in all functions, wielding bargaining power, and in Aldi’s case,

  • Offering a product line in which 90% of items are its own brands;
  • Accepting payment by cash, debit and EBT cards, but not credit cards;
  • Stocking pallets and shelves with products in the cardboard cartons they came in;
  • Requiring customers to bag their own purchases with bags they bring or pay for;
  • Rarely offering more than two brand choices for any product, which increases scale economies and helps with…
  • Keeping average store size to about 16,000 square feet rather than the 60,000 square-foot supermarket average;
  • Limiting store hours to eleven a day;
  • Not accepting manufacturers’ coupons, but bargaining with manufacturers for deep discounts that are passed on to customers; and
  • Requiring insertion of a 25¢ deposit for shopping carts, which discourages customers from leaving them in the parking lot or walking off with them.

For many of these reasons, and because of the company’s product selections, Aldi was “green” decades before most environmentalists learned to say, “sustainability.”

Prices on food staples, paper products, beverages, sanitary articles and household items are about the lowest around. You’ll also find products to warm a hipster’s heart—organic baby kale, cheeses with unpronounceable names, zuppa Toscana, salmon filets, frozen Greek yogurt bars, organic EVOO, mango-peach salsa, exotic chocolates, and on and on.

The company’s test kitchens are legendary, and its product quality tends toward excellent. Britain’s leading consumer watchdog group gave Aldi its Best Supermarket Award two years in a row. If for any reason you don’t like any purchase you’ve made, Aldi will replace the product and refund your money.

Every week the company offers special buys, posting them two weeks in advance. They can include more expensive products like tools, appliances, computers, and other consumer electronics. You can also find an app on their user-friendly website that lets you prepare a shopping list. Or you can sign up to have the weekly specials emailed to you.

Like Costco and Market Basket, Aldi pays its workers substantially above industry averages, and anyone who works 20+ hours per week receives full benefits. That may be why the cashiers are faster than a Somerville parking control officer writing a ticket, even though they work sitting down.

Shawn Buckley is the Medford store’s manager. He grew up in East Somerville, and you’ll find him to be friendly and responsive.

I wistfully wonder what would have happened if Aldi had located in the abandoned Winter Hill Star Market, along with a synergistic companion store. I assume that it’s too close to the Fellsway Aldi and too far from I-93 for Aldi U.S. to consider it as a location now. On the other hand, the Somerville and Medford Stop-and-Shops are closer together than the two Aldies would be.

 

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