Bare EssentialsThe ALDI Way of Retailing

"In their book In Search of Excellence, Peters and Waterman promote the KISS approach, or 'Keep It Simple, Stupid!'. An acronym seemingly created to describe how ALDI operates. ALDI people are doers. Everything is tried out, as fast as possible. They don't get tied down in endless, in-depth analysis."

"Simplicity makes companies quicker. Time is probably the most precious resource available."

"The simpler an organization is, the better it can perform. Simplicity requires less management capacity — at least in terms of quantity."

"An organization should be designed in a simple way and easy to understand, featuring flat hierarchies and simple business procedures. This results in positive cost structures and a reduction of coordination, and requires only a minimum of necessary communication between the members of the organization."

"One can only really advise at this point: do everything possible, step by step, grope forward towards solutions as ALDI and Einstein did. Avoid constructing any complicated, new systems."

"According to Gandhi, 'asceticism is the highest of the arts', and 'a true ascetic does not simply practice his art, he lives it.' ... Theo Albrecht once said: 'People live more on what they do not eat.'"

"Since 1950 we have been adhering to the principle of low prices as well as that of limited selection. This was also a matter of necessity. If we did not want to offer customers a wide range of products then we had at least to offer them some other advantage."

"1. A limited assortment of everyday consumption. 2. All items easy to handle operationally. 3. Only best possible qualities — measured against leading brands. 4. The lowest possible sales prices. 5. Lowest possible cost. 6. As many private labels as possible."

"New items are not added until they have proven good sales in a test in three stores. This avoids burdening the whole organization with a possible flop."

"ALDI is in a position to study individual subjects, because the company is simply structured and the limited number of items in the assortment permits reviewing them on a one-by-one basis."

"If the principles of 'concentration' had been observed in every way, the result would have been a clearer corporate policy towards customers. The company could have considerably strengthened its purchasing power with regards to individual vendors."

"Theo Albrecht exemplifies an ALDI virtue: work on details to continuously improve. There is always a better option. The planned opening of a new store may result in a phone call from Theo Albrecht: 'Position the drawing so that you…' and then it is jointly enhanced."

"Everywhere there are innumerable questions which require creative answers. They should be the central focus of the business. Every minor, goal-related question is important and, finally, determines what shows under the bottom line."

"The easiest way to judge the performance of your own company is to buy your own products like any other customer. Do your own shopping as realistically as possible, in a store where the staff does not know you. You don't notice any of the important details until you are standing in front of the shelf yourself."

"Remember Albert Einstein's approach: 'I grope my way forward.' It is no surprise that ALDI operated completely without consultants. No corporate consultancy, no market researchers, no marketing agencies."

"Managers must be role models. The Executive Board made a point of visiting the stores — discretely observing an employee at his work for a few minutes. Because there is room for improvement any time, any place. The improvement made in one store can be multiplied by several thousands of stores."

"Kaizen means the continuous improvement of everything in the company. Each ALDI company is responsible for specific duties. This means a large number of managers are given additional, interesting duties which in other companies are carried out by central staff departments."

"A Logistic Manager at ALDI, in addition to managing his central warehouse, also takes responsibility for the pallet trucks of the whole company. He works on achieving continuous improvements, obtains a complete overview of the market, and originates organizational improvements of all kinds."

"This method gives people the courage to try something out and perhaps to risk a mistake as well. But even if it does fail it always provides lots of interesting insights. There are very few decisions which are right or wrong."

"ALDI came up with a world novelty which no other major retailer, including Walmart, had thought of before. ALDI required its vendors to apply the barcode onto packages at three or four different places. ALDI was able to be so innovative because its managers focus on business basics."

"Random sample reviews which the Executive Board regularly carries out provide an accurate picture of the company. Attention is focused on the avoidance of any kind of waste in the sense of what the Japanese refer to as muda."

"In 1961 the brothers divided their small dynasty into North and South units. They preferred 'individual leadership' to 'team leadership.' The basic reason was that it eliminated the need for continuous agreement on all essential or even non-essential matters."

"The basic advantages of decentralization: less complexity, less need to communicate, better market knowledge, new people can develop independently, small units breed fewer conflicts, employees know each other, details become more important, a larger variety of ideas are developed."

"Decentralization enables methods, experiences and results to be compared, and creates the freedom to make decisions based on these comparisons. The two ALDI groups have always shared experience, and the separation has substantially increased their wealth of experience."

"Presumably only thoroughly decentralized companies can survive in our complex world. Small instead of large or, as at ABB and ALDI, 'small within large'. Ant instead of elephant."

"'The eight basic principles of successful companies can actually be concentrated into one: decentralization and autonomy.' — Tom Peters. The secret of success is that decentralization turns many employees into entrepreneurs inside the company."

"Overcomplexity in many companies is related to management's fear of making mistakes. Fear is the cradle of bureaucracy."

"The targets set at ALDI are extraordinarily simple. The only concern is lowest costs, lowest possible sales prices and best quality. This is understood by every cashier, and by every worker in the warehouse."

"'We sell 600 items for people's basic food needs, best quality and lowest prices anywhere. Prerequisite is rock bottom costs at all levels.' This would tell ALDI employees everything they need to know. They could act, they could decide."

"Companies with great visions and values do not require any mission statements to realize their ambitions. ALDI never had such a statement — and it never needed one."

"Clear goals make corporate leadership reliable and easy. Many projects have failed due to a lack of clear goals. Poorly conceived projects smell foul at their inception just as rotten organizations are said to stink first at the top."

"Decisions are nearly never general in nature, but are always made very clear in reference to a specific case. ALDI primarily profited from the fact that no generally valid rules were established."

"Don't focus on the numbers. Numbers aren't the vision; numbers are the product. I never talk about numbers."

"The foundations of good organization and leadership: clear goals, few but easy to understand business principles, total customer orientation, uncompromising thoroughness, and work on details at all levels."

"'ALDI is not only low-price, it also provides good value for money.' 46 percent gave 'low-prices' as a reason for shopping at ALDI, 44 percent praised their good value for money, by which they obviously meant good quality."

"ALDI was never stiff-necked or short-sighted in the sense that it gave an 'order' to reduce cost category X by a certain percentage. Cost reduction was never forced. What is not needed can be eliminated. The yardstick for cost management must always be the strategy. Caution must be urged against cutting off the 'strategic branch' on which you are sitting."

"ALDI does not focus on impressions. Its focus is on costs and making the customer an honest offer, without any 'show'. Customers are not supposed to believe ALDI is low-price. ALDI is low-price."

"Merchandise is placed on shelves and pallets solely in response to logistic considerations. Appearance is not a factor."

"Our expenditures on advertising do not even amount to 0.1 percent. All our promotional efforts are put into discount prices, and they are so effective that customers are even prepared to wait in line."

"The goal: customers begin to believe they cannot buy cheaper anywhere else. Once you have achieved that, customers will accept anything else. They will even rearrange their schedules to come at the best shopping times."

"If anything is below par, there are very simple sanctions. The manufacturer who supplied to 20 distribution centers loses perhaps 5 of them. This principle also enables ALDI to test new vendors and develop them slowly."

"Managers at ALDI have shared out some of their authority, their power, to their employees. Power concentrated in the hand of a few is thus avoided and many more employees can participate in a real way."

"The vehicle for transferring this power is the job description. Regulations should not contain a great deal of detail. Instead, they should be goal-oriented and more broadly worded."

"Three things must be equally delegated: the duty, the authority necessary to perform this duty, and the responsibility for execution and result."

"Duties are delegated which others can perform better, others can perform at less cost, make the employee's job more interesting, increase responsibility, are a challenge, and relieve managers to focus on core tasks."

"People like successes, improvements and good performance because it gives their activity a purpose. This is why ALDI cashiers, despite their hard work, were considered the friendliest in the retail business."

"ALDI's success is not based on purchasing — as many competitors believe — but on sales and close-to-customer policies. It may even be the case that ALDI does not always get the best purchase prices."

"As a principle, ALDI takes back anything which the customer does not like. ALDI completely eliminated any options by absolutely prohibiting any stores from rejecting a return."

"The best service is the kind which is not felt to be out of the ordinary, but which is simply done."

"The secret of successful retailing is to give the customer what they want."

"At ALDI purchasing and sales are kept separate. The management decides on assortment and prices based solely on sales considerations. Purchasing has the clearly defined duty to obtain goods at the lowest possible price. This system reduces coordination and communication."

"The General Manager's Conference is ALDI's coordinating authority. Final decisions do not require everybody's agreement, but in general every manager supports them after an intensive discussion."

"At ALDI the number of statistics was so few they could nearly be counted on one hand. They were simple, manageable and comprehensible, and not scientific at all."

"You can easily get lost in a world of illusions and dead ends if you believe too firmly in numbers. Every number reflects certain conditions which have contributed to their development."

"'Human behavior and strategy must go well together.' — Rolf Berth. Strategy and character are so intractably intertwined that a specific personality is not able to follow more than only a very limited number of strategic concepts."

"Even weak resources can drive good results given capable leadership and organization. By contrast, great resources can be blocked by poor leadership and organization."

"ALDI cultivates qualities attributed to successful mid-sized companies: a strong sense of mission, unlimited attention to fundamentals, fierce opposition to bureaucracy combined with an eagerness to experiment, and strong customer-orientation."

"An example of strong-willed adherence to principles — which at times can border on stubbornness or even blindness — was the way butter was treated. Butter was the only important refrigerated product not sold. This wholly contradicted the repeatedly quoted customer orientation. Bismarck's comment would have been right: having principles was like trying to run through the forest with a stick clenched between your teeth."

"The kidnappers even had to ask him to show his personal identification card to be sure they caught the right person. The official message inside the company was that Theo was home with a cold — but staying home because of a cold would have been very unusual for him. No one can remember him ever having stayed away from work due to illness."