6 ms·

While I wouldn't completely discount cultural and business-environment differences, this is probably the most relevant part, > Another fatal flaw was that Germ

While I wouldn't completely discount cultural and business-environment differences, this is probably the most relevant part, > Another fatal flaw was that Germany's retail market is already saturated with discounters such as Aldi and Lidl, meaning that any new arrival inevitably finds itself in the midst of a cutthroat price war. Walmart's model is to do high volume at low margins with a highly optimized supply chain. But that is already exactly the model of Lidl and Aldi, and there's not a lot of room to beat them at that game.

amyjess 11y ago
If anyone can out-Walmart Walmart, it's Aldi. When Aldi came to Dallas a few years ago (I'd like to say 2010-2011ish), they started a price war over milk that resulted in milk prices in Dallas plummeting to 1960 levels. Edit: Source: http://www.wfaa.com/story/money/consumer/2014/08/10/13621020/ http://www.wfaa.com/story/money/consumer/2014/08/10/13621020...
- untog 11y ago
  I do wonder what the effect of this is on dairy farmers.
  - Kalium 11y ago
    If recent events in the UK are any guide, they get really unhappy over low prices. Your basic economic forces take it from there. Dairy farmers are like any other business in that many can stand to be more efficient.
    - chestnut-tree 11y ago
      "If recent events in the UK are any guide, they get really unhappy over low prices." Dairy farmers in the UK were complaining that some supermarkets were paying them less for a litre of milk than what it cost them to produce the milk. After protests from farmers, those supermarkets - which included Aldi, Lidl, Asda (owned by Walmart), and Morrisons - agreed to pay more for the milk price. The cost of milk is pretty cheap in the UK. Four pints (2.27 litres) of fresh (not UHT) semi-skimmed milk is usually 90p to £1 in most UK supermarkets (that'a approx €1.37 or $1.50) "Dairy farmers are like any other business in that many can stand to be more efficient." I don't know if farming practices are inefficient in the UK, but it's worth asking: what does efficiency mean when it comes to farming and animal welfare? I don't want to see dairy farmers go out of business or for milk to be imported. And I don't want to see more "zero grazing" farms where intensive indoor grazing is the norm and cows have little or no outdoor access. Intensive farming methods like this are already used in the UK and continental Europe and look set to grow. Perhaps it's really for us as consumers to ask: what price are we prepared to pay for milk?
      - Kalium 11y ago
        I, personally, am completely willing to see dairy farmers go out of business because they can't compete with imports.
        untog 11y ago
        That can be a short-sighted view, geopolitically. Look at the dependency many countries have on Russia for gas these days.
        Kalium 11y ago
        True! However, for things that are not economic necessities I view it as less of a problem.
      - jarfil 11y ago
        When "outdoor grazing" means dedicating land for animal use instead of planting crops that could feed several hundred people, just so that a couple of them can get to drink milk... I'd rather see the "zero grazing" variant. Or get rid of the stupid cows already.
  - ctdonath 11y ago
    Government subsides are a major factor in dairy prices.
  - mullen 11y ago
    They sell more milk at a lower price, so I believe it works out for them.
    - 6t6t6 11y ago
      It is never as easy as that. Law of supply and demand is not a linear function and externalities count too. Also, most of the markets are somehow captive. I doubt that people will drink much more milk because it is cheaper. What happens is that supermarkets don't care if they loose money with one product because what counts is the average of the basket. So what happens is that milk producers will pay the price of a marketing operation.
lnanek2 11y ago
I like the Aldi I used to go to in Kansas while working there. Cheap, clean and no one bothers you. It actually was a better experience than Walmart, even for this American. They had cool, better carts too!
- kordless 11y ago
  Unfortunately Aldi in the States doesn't do as well as Aldi in Germany.
  - joezydeco 11y ago
    ALDI (Süd) is adding 600 stores and 10,000 jobs in North America by 2018, a 50% expansion. They're doing quite well. http://www.chicagotribune.com/business/ct-aldi-expansion-hiring-jobs-0806-biz-20150806-story.html http://www.chicagotribune.com/business/ct-aldi-expansion-hir... ALDI Nord owns Trader Joe's in the USA, and that chain is doing great business as well.
    - kordless 11y ago
      Trader Joe's rocks. Evidently things have turned around for Aldi since I remember hearing about them having problems with stores in the southern part of the US. Honestly, that's been 8-9 years ago now, so it would appear I was wrong about their current successes!
  - Jun8 11y ago
    AFAIK Aldi is expanding in the US. Also, Trader Joe's which is hugely popular with the younger crowd (at least here in Chicago) is owned by the same company.
ctdonath 11y ago
"Not a lot of room" in this case is basically zero. FYI to those unfamiliar with Aldi: their (grocery) stores are fairly small, run in a seriously minimalistic manner. Products are usually presented either on their shipping palettes, and/or still in volume cases - customer does some of the unpacking. Most products are "made for Aldi" or otherwise sourced from bottom-price manufacturers. Variety is nearly nonexistent. Typically (at least in every store I've seen in USA) there are only two employees at any time - one acting clerk, other stocking/cleaning. Credit cards are not accepted; before debit cards, it was cash only. Aldi seemed the last store to use barcode scanners, clerks having literally memorized the codes for every product in the store and could process checkout nearly as fast (sometimes faster) than barcode scanning. Stores are very clean & simple. You'd be hard-pressed to beat that cost-cutting business model.
- vermontdevil 11y ago
  Don't forget $0.25 deposit for shopping cart and bags are extra.
  - joezydeco 11y ago
    Which keep the stores and parking lots remarkably clean. That simple deposit keeps all the carts up front and organized. Lack of free bags inspires people to take the packing boxes with them.
    - vermontdevil 11y ago
      Yeah - not criticizing it. Thought it was sensible. Also keeps costs down as people wouldn't abuse the carts.
  - Oletros 11y ago
    > Don't forget $0.25 deposit for shopping cart Here in Spain, almost all of the shopping carts from every chain works with deposit, the coins accepted are 50 cents, 1 euro, 2 euro And almost no chain gives you free bags
  - 11y ago
r3m6 11y ago
In addition, an important part of Aldi's recent success in Germany is that they do not compromise on quality. Often their products (say olive oil, toilet paper,...) win/score at the top of consumer reports. They have a great brand image (much better than Lidl).
- Mithaldu 11y ago
  That depends on which part of Germany you're in. There are two Aldi chains in Germany, run by brothers. South Aldis are great. North Aldis are understocked, dirty and generally don't provide a great experience.
pbreit 11y ago
It still surprises me that a company like Walmart, with such massive advantages, cannot figure it out.
usrusr 11y ago
As a german, don't even know enough about Walmart to tell if they are in the same game or not. There are two mutually exclusive ways of doing cheap: you either take pride in being cheap our you try to hide it in everything but the price tag, aping pricier retailers in all other aspects (something Aldi or Lidl would never do, minimalistic presentation is the core of their brand identity). The pretend-premium version of cheap simply would not work in Germany, because kills trust in the value of the actual products sold. Over decades, the (maybe at most semi-true) idea that products bought at Aldi or Lidl will provide high value despite their low price because all the saving comes only from cheap presentation has taken deep roots in the public consciousness. And this is where cultural differences really put Walmart in a pinch: even if they are firmly in the proud-cheap camp (which neither I not the general public would know), transplanting American service ideas like excessive greeting or the whole bag-packing thing (even just getting a bag for free is considered borderline wasteful) would give the exact opposite impression. Premium presentation, that combines with cheaply sourced goods into a very toxic "faux-quality" image.
- woodpanel 11y ago
  "Over decades, the (maybe at most semi-true) idea that products bought at Aldi or Lidl will provide high value despite their low price" I hate to be defending Aldi's rep (or the allegedly faux idea), but as a regular shopper in Germany'S four major chains (Edeka, Rewe,Lidl, Aldi), I must insist: Aldi/Lidl ARE providing a good price-to-value ratio for customers :-) Of course, with the organic & premium chains popping up the last decade(s) you can get better quality. But those high-quality shops are making up just a small share of the market [1]. Their competitors (REWE/EDEKA) will offer you a wide range of [lets say Beans], ALDI/LIDL will offer you just one. But while that one usually has the quality of the competitor's most expensive version it comes with the price-tag of the competitor's cheapest. [1] http://de.statista.com/statistik/daten/studie/4916/umfrage/marktanteile-der-5-groessten-lebensmitteleinzelhaendler/ http://de.statista.com/statistik/daten/studie/4916/umfrage/m...
  - usrusr 11y ago
    The "semi-true" was aimed as much at the explanation (cheap presentation, which can't be the sole reason, otherwise it would be too easy to successfully imitate) as at the quality of goods (which is often high, but not always). Edeka and Rewe are already out of the cheap range. Mainstream with cheap options very chose to the discounters and very far from the prices in the tiny organic/luxury segment, but still clearly distinguishable from the strictly cheap places.

amyjess 11y ago

If anyone can out-Walmart Walmart, it's Aldi. When Aldi came to Dallas a few years ago (I'd like to say 2010-2011ish), they started a price war over milk that resulted in milk prices in Dallas plummeting to 1960 levels. Edit: Source: http://www.wfaa.com/story/money/consumer/2014/08/10/13621020/ http://www.wfaa.com/story/money/consumer/2014/08/10/13621020...

untog 11y ago
I do wonder what the effect of this is on dairy farmers.
- Kalium 11y ago
  If recent events in the UK are any guide, they get really unhappy over low prices. Your basic economic forces take it from there. Dairy farmers are like any other business in that many can stand to be more efficient.
  - chestnut-tree 11y ago
    "If recent events in the UK are any guide, they get really unhappy over low prices." Dairy farmers in the UK were complaining that some supermarkets were paying them less for a litre of milk than what it cost them to produce the milk. After protests from farmers, those supermarkets - which included Aldi, Lidl, Asda (owned by Walmart), and Morrisons - agreed to pay more for the milk price. The cost of milk is pretty cheap in the UK. Four pints (2.27 litres) of fresh (not UHT) semi-skimmed milk is usually 90p to £1 in most UK supermarkets (that'a approx €1.37 or $1.50) "Dairy farmers are like any other business in that many can stand to be more efficient." I don't know if farming practices are inefficient in the UK, but it's worth asking: what does efficiency mean when it comes to farming and animal welfare? I don't want to see dairy farmers go out of business or for milk to be imported. And I don't want to see more "zero grazing" farms where intensive indoor grazing is the norm and cows have little or no outdoor access. Intensive farming methods like this are already used in the UK and continental Europe and look set to grow. Perhaps it's really for us as consumers to ask: what price are we prepared to pay for milk?
    - Kalium 11y ago
      I, personally, am completely willing to see dairy farmers go out of business because they can't compete with imports.
      - untog 11y ago
        That can be a short-sighted view, geopolitically. Look at the dependency many countries have on Russia for gas these days.
        Kalium 11y ago
        True! However, for things that are not economic necessities I view it as less of a problem.
    - jarfil 11y ago
      When "outdoor grazing" means dedicating land for animal use instead of planting crops that could feed several hundred people, just so that a couple of them can get to drink milk... I'd rather see the "zero grazing" variant. Or get rid of the stupid cows already.
- ctdonath 11y ago
  Government subsides are a major factor in dairy prices.
- mullen 11y ago
  They sell more milk at a lower price, so I believe it works out for them.
  - 6t6t6 11y ago
    It is never as easy as that. Law of supply and demand is not a linear function and externalities count too. Also, most of the markets are somehow captive. I doubt that people will drink much more milk because it is cheaper. What happens is that supermarkets don't care if they loose money with one product because what counts is the average of the basket. So what happens is that milk producers will pay the price of a marketing operation.

lnanek2 11y ago

I like the Aldi I used to go to in Kansas while working there. Cheap, clean and no one bothers you. It actually was a better experience than Walmart, even for this American. They had cool, better carts too!

kordless 11y ago
Unfortunately Aldi in the States doesn't do as well as Aldi in Germany.
- joezydeco 11y ago
  ALDI (Süd) is adding 600 stores and 10,000 jobs in North America by 2018, a 50% expansion. They're doing quite well. http://www.chicagotribune.com/business/ct-aldi-expansion-hiring-jobs-0806-biz-20150806-story.html http://www.chicagotribune.com/business/ct-aldi-expansion-hir... ALDI Nord owns Trader Joe's in the USA, and that chain is doing great business as well.
  - kordless 11y ago
    Trader Joe's rocks. Evidently things have turned around for Aldi since I remember hearing about them having problems with stores in the southern part of the US. Honestly, that's been 8-9 years ago now, so it would appear I was wrong about their current successes!
- Jun8 11y ago
  AFAIK Aldi is expanding in the US. Also, Trader Joe's which is hugely popular with the younger crowd (at least here in Chicago) is owned by the same company.

ctdonath 11y ago

"Not a lot of room" in this case is basically zero. FYI to those unfamiliar with Aldi: their (grocery) stores are fairly small, run in a seriously minimalistic manner. Products are usually presented either on their shipping palettes, and/or still in volume cases - customer does some of the unpacking. Most products are "made for Aldi" or otherwise sourced from bottom-price manufacturers. Variety is nearly nonexistent. Typically (at least in every store I've seen in USA) there are only two employees at any time - one acting clerk, other stocking/cleaning. Credit cards are not accepted; before debit cards, it was cash only. Aldi seemed the last store to use barcode scanners, clerks having literally memorized the codes for every product in the store and could process checkout nearly as fast (sometimes faster) than barcode scanning. Stores are very clean & simple. You'd be hard-pressed to beat that cost-cutting business model.

vermontdevil 11y ago
Don't forget $0.25 deposit for shopping cart and bags are extra.
- joezydeco 11y ago
  Which keep the stores and parking lots remarkably clean. That simple deposit keeps all the carts up front and organized. Lack of free bags inspires people to take the packing boxes with them.
  - vermontdevil 11y ago
    Yeah - not criticizing it. Thought it was sensible. Also keeps costs down as people wouldn't abuse the carts.
- Oletros 11y ago
  > Don't forget $0.25 deposit for shopping cart Here in Spain, almost all of the shopping carts from every chain works with deposit, the coins accepted are 50 cents, 1 euro, 2 euro And almost no chain gives you free bags
- 11y ago

r3m6 11y ago

In addition, an important part of Aldi's recent success in Germany is that they do not compromise on quality. Often their products (say olive oil, toilet paper,...) win/score at the top of consumer reports. They have a great brand image (much better than Lidl).

Mithaldu 11y ago
That depends on which part of Germany you're in. There are two Aldi chains in Germany, run by brothers. South Aldis are great. North Aldis are understocked, dirty and generally don't provide a great experience.

pbreit 11y ago

It still surprises me that a company like Walmart, with such massive advantages, cannot figure it out.

usrusr 11y ago

As a german, don't even know enough about Walmart to tell if they are in the same game or not. There are two mutually exclusive ways of doing cheap: you either take pride in being cheap our you try to hide it in everything but the price tag, aping pricier retailers in all other aspects (something Aldi or Lidl would never do, minimalistic presentation is the core of their brand identity). The pretend-premium version of cheap simply would not work in Germany, because kills trust in the value of the actual products sold. Over decades, the (maybe at most semi-true) idea that products bought at Aldi or Lidl will provide high value despite their low price because all the saving comes only from cheap presentation has taken deep roots in the public consciousness. And this is where cultural differences really put Walmart in a pinch: even if they are firmly in the proud-cheap camp (which neither I not the general public would know), transplanting American service ideas like excessive greeting or the whole bag-packing thing (even just getting a bag for free is considered borderline wasteful) would give the exact opposite impression. Premium presentation, that combines with cheaply sourced goods into a very toxic "faux-quality" image.

woodpanel 11y ago
"Over decades, the (maybe at most semi-true) idea that products bought at Aldi or Lidl will provide high value despite their low price" I hate to be defending Aldi's rep (or the allegedly faux idea), but as a regular shopper in Germany'S four major chains (Edeka, Rewe,Lidl, Aldi), I must insist: Aldi/Lidl ARE providing a good price-to-value ratio for customers :-) Of course, with the organic & premium chains popping up the last decade(s) you can get better quality. But those high-quality shops are making up just a small share of the market [1]. Their competitors (REWE/EDEKA) will offer you a wide range of [lets say Beans], ALDI/LIDL will offer you just one. But while that one usually has the quality of the competitor's most expensive version it comes with the price-tag of the competitor's cheapest. [1] http://de.statista.com/statistik/daten/studie/4916/umfrage/marktanteile-der-5-groessten-lebensmitteleinzelhaendler/ http://de.statista.com/statistik/daten/studie/4916/umfrage/m...
- usrusr 11y ago
  The "semi-true" was aimed as much at the explanation (cheap presentation, which can't be the sole reason, otherwise it would be too easy to successfully imitate) as at the quality of goods (which is often high, but not always). Edeka and Rewe are already out of the cheap range. Mainstream with cheap options very chose to the discounters and very far from the prices in the tiny organic/luxury segment, but still clearly distinguishable from the strictly cheap places.