Aldi’s Owners Gained Riches by Cutting Prices

Via Cato

Elizabeth Warren and Bernie Sanders continued to bash wealth in the Democratic presidential debate Tuesday night. They view wealth as a zero-sum—that people at the top essentially stole their fortunes from the rest of us. Sanders said, “And we cannot afford a billionaire class, whose greed and corruption has been at war with the working families of this country for 45 years.”

The truth is that many of the richest people in market economies generated their fortunes by raising living standards for working families. Entrepreneurs have continuously slashed prices and improved product quality to the particular benefit of folks at the bottom.

I visited a new Aldi grocery store near me in Virginia last night. What a no-nonsense operation! The store was packed with customers. The secret is “no frills” and low prices.

The Wall Street Journal profiled Aldi today:

German discount chains Aldi and Lidl are capturing a larger share of U.S. grocery bills and pressuring U.S. retailers to respond.

The privately owned foreign companies have increased sales with their simpler stores that offer fewer products at lower prices. In response, U.S. grocers are lowering prices on staples such as milk and eggs and adding more products the discounters aren’t known for, such as fresh foods. The battle comes as supermarkets already are fighting to keep customers from shopping more online.

… Walmart executive Steve Bratspies said at a recent conference that the giant retailer is counting on its wider range of products and equally low prices to keep customers loyal. Other discounters are feeling the pressure to cut prices to match Aldi and Lidl. “You need to be at the lowest price to be taken seriously by your customer,” said Eric Lindberg, chief executive of Grocery Outlet Holdings Corp.

Aldi is owned by the Albrecht family of Germany, which Forbes counts as one of the richest in the world. They made their fortune not on the backs of the poor, but by serving the poor and everyone else. Food represents a relatively higher share of living costs for lower-income households.

I’m guessing that the Albrecht’s $36 billion fortune does not represent gold bars hidden under their mattresses at home in Germany. But rather it is active business capital deployed to serve millions of Aldi customers and push down prices and profits at other chains.

I don’t know whether Sanders and Warren shop at discount stores, but they should consider that much of the wealth they want to penalize stems from such entrepreneurial efforts—efforts that reduce poverty through innovation, competition, and reduced prices.

-----------------------------------------------------
It is my sincere desire to provide readers of this site with the best unbiased information available, and a forum where it can be discussed openly, as our Founders intended. But it is not easy nor inexpensive to do so, especially when those who wish to prevent us from making the truth known, attack us without mercy on all fronts on a daily basis. So each time you visit the site, I would ask that you consider the value that you receive and have received from The Burning Platform and the community of which you are a vital part. I can't do it all alone, and I need your help and support to keep it alive. Please consider contributing an amount commensurate to the value that you receive from this site and community, or even by becoming a sustaining supporter through periodic contributions. [Burning Platform LLC - PO Box 1520 Kulpsville, PA 19443] or Paypal

-----------------------------------------------------
To donate via Stripe, click here.
-----------------------------------------------------
Use promo code ILMF2, and save up to 66% on all MyPillow purchases. (The Burning Platform benefits when you use this promo code.)
Click to visit the TBP Store for Great TBP Merchandise

17
Leave a Reply

avatar
  Subscribe  
Notify of
Dutch
Dutch

Take a look a Costco – you may have to buy more in volume (like 2 jars of pasta sauce) – but it’s less then 1/2 the price of the grocery store. Costco is also similar with no frills stores.

flash
flash

” it’s less then 1/2 the price of the grocery store ”
How do they do it? …. must be that level paying field. Mom and Pop grocer never knew what hit ’em.

Parent Company Name:
Costco
Ownership Structure:
publicly traded (ticker symbol COST)
TOTAL $39,178,609

https://subsidytracker.goodjobsfirst.org/prog.php?parent=costco

overthecliff
overthecliff

Very competitive with prices. Excellent quick checkouts. Most other outlets don’t compare for prices and Walmart makes you wait for check outs. Even Walmart is expensive comparatively. Wouldn’t go there anyway.

Horst
Horst

Here in Germany, it is still the best store. Full basket, reasonable price.
No annoying music. No horror pictures at the counter, at Kaufland you got to look at amputations and stuff on cigarette boxes… And you are forced to walk half a mile there.

But they started to abandon some of the principles.
We got a free gift action here, you get a little rubber “Emonji” if you pay more than 20 Euro. What a waste.
They installed a coffee bar, you can pull a cup from an automat. They added more brand products.
The non food stuff is trash.

SeeBee
SeeBee

Aldi’s is the poor man’s Trader Joe’s . The quality is so-so. They sell a lot of processed crap. But to each his own.

Dutch
Dutch

I tried the one in Minneapolis (a few years ago). When you enter, you’re forced to walk down an aisle of snack food and cookies. They’re knock-offs – I remember see an A-1 bottle, same color label and font but a knock-off. Lot’s of Somali’s, avocados as large as a tennis ball. Lot of frozen food.

Martel's Hammer
Martel's Hammer

Even in the notoriously low margin grocery business, innovation exists. The left never seems to understand this concept, that markets work and that the world is simply not a zero-sum game.

https://www.feedough.com/aldi-business-model-aldi-cheap/

Anonymous
Anonymous

Their notoriously low margin, is on standing inventory.

Anonymous
Anonymous

Which turns over about 26 times each year.

Ivan
Ivan

Stating the obvious but Sanders and Warren are parasitic grifters that have no business talking about how others earned their wealth.

Iska Waran
Iska Waran

Three pound bag of gala apples at Aldi: $1.49. Ten pound bag of potatoes: $1.69. Dozen eggs: 87 cents. Hot dog or hamburger buns: 85 cents for an eight pack. Two frozen pounds of wild-caught pink salmon: $7.29. Big bunch of broccoli: $1.49 (conventional), $2.49 (organic). They have things that are very well-priced and things that are no cheaper than elsewhere. They don’t have everything. Some of their store brands suck (and are sodium-laden). Still, the stuff you spend $50 for there would be $90 or more elsewhere. I avoided the place for years until the other grocery stores started jacking up their prices six months ago. I hate Costco. Their prices aren’t really low, the experience sucks ass and they’re a real left-wing corporation.

WestcoastDeplorable
WestcoastDeplorable

We shop at Aldi and have found their store brands comparable to top shelf brands, and a whole lot cheaper. They’ve solved the problem most stores have with shopping carts…at Aldi you “rent” your cart with a quarter inserted in a release mechanism. When you’re done with it, just return to the “cart corral” and retrieve your quarter from the cart ahead of you! No carts scattered all over the lot!

NJroute22

Most of those “store brands” are made by the same places that make the brand names (i.e., Girl Scout Cookies, etc.) While we avoid all packaged and processed food (you should too) – we love ALDI a lot. Money goes a long way there. I like their instant coffee, dog treats (not for me), cheeses, heavy cream, etc. Even get my 73% lean ground beef there (under $2/lb. often). It’s about finding their strengths. Heck I’d be in trouble if I liked snacks and chips like I used to.

Iska Waran
Iska Waran

Oh yeah – 8 oz. instant coffee at Aldi is $2.79. Their meats are not all cheap, but they always have whole chickens at 95 cents a pound.

Remember Obama trying to be a man of the people by bitching about the cost of “arugula at Whole Foods” while he was campaigning in Iowa? Number of Whole Foods in Iowa at the time: zero. Number of Iowans who knew what arugula was: zero.

flash
flash

Hard work and sacrifice. It’s what made global corporatism great . Yep …ask a Libertarian …muh free market is real.

Subsidy Tracker Parent Company Summary
Parent Company Name:
Aldi

Subsidy Value
State/Local $82,956,108

https://subsidytracker.goodjobsfirst.org/prog.php?parent=aldi

As I have noted before nearly all of those on the Forbes 400 list, that is the wealthiest Americans, didn’t get their money through their “own effort” per-se. Oh sure, people like Bloomberg didn’t inherit most of it — but they hardly made their fortunes in a freely operating market with dozens or hundreds of competitors.

Likewise, Amazon’s Bezos didn’t either. He is one of the shining examples of arbitrage of the legal system to an astounding degree. Just the sales tax games he has pulled alone are arguably the reason the firm turned into a retailing powerhouse; having a 6-10% advantage in the “at the customer’s door” price as a result of not collecting sales taxes is enormous while at the same time it shifts those taxes to other businesses and the residents via other means — such as property, income and excise tax levies. This has, in aggregate, amounted to tens of billions of dollars a year that others have had to pay and bankrupted tens of thousands of businesses across the nation.

https://market-ticker.org/akcs-www?post=237501

old white guy
old white guy

If wealth creation was a zero sum game then America and the world would be nothing more than a barter system with zero growth and all would be living in abject poverty.

flash
flash

You mean there’s no level playing field and muh capitalism ain’t real?

Discover more from The Burning Platform

Subscribe now to keep reading and get access to the full archive.

Continue reading