German discounter Aldi is betting billions it can win over American shoppers. How? By offering them way fewer choices than rival retailers.
The unlikely proposition has worked nearly everywhere Aldi has set foot. The company is now one of the biggest retail groups in the world with more than 10,000 locations, businesses in 18 countries and annual revenues approaching €70/$83 billion.
The American grocery market, one of the largest and most competitive in the world, is on the cusp of dramatic change since Amazon.com Inc. acquired Whole Foods Market Inc. this summer and Google struck a partnership with Wal-Mart.
But the Germans have a plan, forged in the rubble of World War II. Aldi offers a deliberately pared-down selection – most stores stock between 1,300 and 1,600 items. By comparison, Wal-Mart’s Supercenters have in recent years carried around 120,000 items. On a basket of 30 typical household items, Aldi’s prices are on average almost 17% lower than Wal-Mart’s.
Aldi is gambling it is more in tune with the American tastes, rolling out small, nimble stores instead of sprawling warehouses and supermarkets that take longer to navigate.
Why It’s Hot
It’s another example of how major players are betting on simplicity, standardization and speed. And a reason to pause and consider the trade off between choice and control versus convenience and ease.