When US marketing gurus try to second guess German hard discounters' success

Don't get me wrong. I love to get fresh and crispy news from Retail Dive. But as former MD of an ALDI supermarket region in France, I get upset when I read stories like the one below, which are the result of lazy and sensationalist journalism and in the same line of work as the title on the right hand side...

1. There is no secret to Aldi's and Lidl's success. If there ever was one, the shroud was lifted by Dieter Brandes, one of my former colleagues, in 1998, translated into English in 2004. So as of 2004, any retail guru could know! (for US$39,07 on Kindle, ALDI doesn't have an in-store library).

2. The key to Aldi's and Lidl's success is not about being cheap. It is about selling private label products that are either retro engineered (or simply produced by the leading brand) to a quality comparable to the leading brand in blind tests. That's NOT CHEAP, it is VALUE. Or, to use Walmart's "EDLP", it is EDVLP (every day very low price). A very customer-centric concept, where lower-income (and other price conscious) customers - thanks to EDVLP - become the VIP!

3. An anecdote: when Aldi and Lidl started hitting their French traditional competitors hard in the 90s, all supermarket chains launched "first-price" products.

They cost the same price as Aldi's private label, but were engineered NOT TO CUSTOMER TASTE but to the high operational costs of their traditional competitors. Aldi's competitor product to Orangina, a fizzy orange soda with real pulp highly appreciated by the French, tasted and looked like Orangina. One of the leading supermarked chains brought a product on the market that was deep orange (not having paid attention to the fact that Orangina is actually egg yellow), transparent (Orangina is opaque due to the pulp) and with artificial flavors only .

When I blind tested the three (part of our daily obligations), I confounded Aldi's me-too with real Orangina, but nearly puked when tasting the CHEAP product. It was so bad, I couldn't even find a photo on Google for this article.

5. Another, very personal story. When I came into Aldi France, I was astonished we had no vanilla ice cream in our product range. I asked and found out that it had been tried, but without local market testing. So I had a leading German producer of top-of-the-range branded ice cream come in and gave him as a brief to produce a prototype vanilla ice cream for a regional testing that could not be distinguished from the leading brand in blind testing. It took them three months, then we launched it, for 9,80 francs (1,50€) per liter vs. 21 francs (3,15€) for the leading brand. A50+% discount on the holy grail of ice cream! The product went national within 3 months!

6. PS : my kids grew up on Aldi's me-too Nutella. And when my wife once bought the real thing because Aldi was out of stock, they protested. For them, Tartichoc was the real McCoy!

4. Our US writer continues: "The ALDI formula isn’t complicated. It keeps costs down by focusing on food, bypassing non-essential grocery store services like in-store banking, pharmacies or check cashing common in other U.S. supermarkets." Now that is just so terribly US-centric. ALDI doesn't by-pass these services, it never had them on offer. They were legal no-go when the concept was created. However, where ALDI excelled was when teaming up with a high-quality fresh butchery chain (in Belgium and Northern France). And LIDL changed the surface of the hard-discounting planet forever when creating in-store bakeries in the early 2010s where fresh baguette still sells at 1989 prices. The whole store smelling of fresh baguette and croissants gets your stomach juices flowing and fills the shopping cart.

5. On the ground, Aldi was agile before the digital gurus even invented that word. Any good idea about maintenance was brought up from the field to the purchasing committee and became the standard when proven a good idea. Too much time wasted on cutting open wine boxes? Have suppliers deliver the wine in pre-perforated rip-off cartons. Too much maintenance on replenishing a new, successful product? Make space and present it on a pallet! Store managers ordering too much: make the reserve store too small to hold excess merchandise...

6. Conclusion: Hard discount is about customer excellence where it counts. Product quality is the hero and EDVLP the key customer touch point. For a long time, in the name of low pricing, Aldi and Lidl accepted long queues in front of the cash register to keep payroll low. They had understood that queuing was not a key pain point on their customer's journey! Today, Lidl France has become a national category killer, has gone main stream and reinforced store teams, realizing that acquiring middle-class customers had shifted the importance of the wait-in-line pain point! But that's another story...