Bare Essentials 2011
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The Book:
Title in Germany „Konsequent einfach. Die ALDI Erfolgsstory“. English title: „Bare Essentials – The ALDI Way to Retail Success“. Sold 100.000 times in Germany. Since 1998 on most of the Bestseller’s lists; sometimes No. 1.
Translated into Chinese, Korean, Portuguese, Dutch.
Facts on ALDI:
Together with Wal-Mart and Tesco ALDI is the top retailer in the world. Operating a limited assortment of only 1800 articles they achieve revenues of more than 77 Billion USD. Per single item they get up to 14 times the revenue Wal-Mart makes.
Since 50 years Karl and Theo Albrecht are following the mission which Karl once established: „Our only consideration when we are working out a product’s price is how cheaply can we sell it“.
Together the owners Karl and Theo Albrecht are the wealthiest men in the world. According to Young and Rubican, ALDI is the most famous brand in Germany since more than ten years – more famous than Coca Cola and Mercedes. According to German top managers ALDI is the best organized company in Germany (manager magazin).
ALDI operates 8000 stores in Europe plus and more than 1000 stores in the US and Australia.
Die Deutsche Bibliothek CIP-Einheitsaufnahme Brandes, Dieter: Konsequent einfach: die ALDI-Erfolgsstory / Dieter Brandes. – 4. Aufl., Frankfurt/Main ; New York : Campus Verlag, 1999 ISBN 3-593-35904-9
Contents
Preface (1998)
5
Preface (2011)
8
Introduction
ALDI – a Portrait in Miniature
9
„Our only consideration when we are working out a product’s price is how cheaply we can sell it“ 10 Less is better than too much 12 …. groping forwards in the dark like Albert Einstein 12 Confidentiality as a Principle 14 History and Growth 16 Clear Structures 15 ALDI’s Corporate Structure (North) 16 Financial Development in Germany 17 Good Grades from Consumers and the Trade Journals 18 ALDI and the Competition 20 „ALDI Is Where the Action Is“ 21 Is the End of Growth in Sight? 21 ALDI and Wal-Mart: The World´s Top Retailers 22 ALDI and General Electric: Like a Pair of Twins – and just like Wal-Mart 24 Success Comes from Being Different 24
Part 1
The ALDI Corporate Culture
27
The Corporate Culture is the Key to Success 28 Unwritten Rules 28 Culture by Example 29 Asceticism as a Basic Principle 31 Frugality as a Guiding Principle 32 Promoting Managers from Within 33 No Gossip, No Scandals 34 Quiet Success 35 Best Regards from Mülheim 36 No Manipulation \u2013 No Tricks 37 Fair Treatment of Vendors 38 Customers Can Have Complete Confidence 39 Simplicity Is Not Easy 39 The Shortest Path to Recognizing Customer Needs 40 Providing Basics Well 41 Credibility 42 Uncompromising Quality and Product Range Policy 42 Dealing with Returns 43 Obsession with Detail: Small Triumphs Every Day 44 Theo Albrecht Draws Store Interiors 45 >From Mount Olympus into the Stores 45 An Interest in Detail or Rule Crazy? 46 Persistence and Strict Adherence to the System despite Daily Temptations 48 „Mistrust-Driven Management?“ 49 Experiment Instead of Endless Analysis 50 The Secret, or the Art of Simplicity 52 The Question „Why?“ 54 Shrewd Self-Restraint on Product Mix 55 A Source of Error: Cost Accounting 57 The Fear of Making Mistakes 58 What Is Special about ALDI Corporate Culture 59
Part 2
Organization and Leadership
61
Good Organization Offsets Poor Leadership 62 Leadership and Organization Determine Success 62 Only a Minimum of Communication 63 The German Company with the Best Organization 64 The Organization of an ALDI Regional Company 65 The General Manager Conference: Authoritarian Tendencies on the Increase 66 The Foundations of Good Leadership and Organization 67 Clear Goals Avert Conflicts 68 Dropping Mission Statements 70 More Similarity with Toyota than with Tengelmann 71 Kaizen at ALDI 71 Trial and Error 72 The \u201cThree-Store Tests\u201d‘ 73 Personal Commitment and Passion 73 ALDI’s Reordering System: If it is gone – replace it 74 Decentralization and Delegation 74 Autonomy Means Less Complexity 75 ABB and ALDI: Decentralized and Successful 76 Delegation and Control 78 Delegation Means Sharing the Power 79 The „Harzburg Model“ 80 Responsible Leadership and Responsible Action 81 „Supervision“ and Controlling Results 83 Review of the General Manager 85 Practical Line Work Instead of Theoretical Staff Work 88 Creativity Requires Little Knowledge, no Data and a Bit of Ignorance 89 Excursion: Direction Product Profitability (DPP) 91 Focusing on the Essentials 92 Statistics and Internal Competition: ALDI’s Internal Benchmarking 92 Analyzing Masses of Data or Thinking Independently 94 Excursion: The Sense and Nonsense of Annual Budgets 96 Decisions on Specific Cases 98 The Executive Board 99 What Authority Does the Owner Have? 100 Special Features of the ALDI Organization 101
Part 3
Business Principles
103
The Five Principles of the ALDI Sales Policy 104 The Lowest Prices Anywhere 104 Price Wars 107 Quality Is More Important than Anything Else – Private Label Policies 108 The Number 1 Coffee 110 Quality Conscious Consumers 111 Rigorous Quality Control 112 600 Items Define One Company 113 The Toothpaste Philosophy 115 Less Is More 117 Success is Not Decided by the Purchasing Department 118 Excursion: Efficient Consumer Response (ECR) 122 Excursion: Category Management 125 Advertising Means Informing the Customers 125 Dealing with Vendors: Consistent and Fair 127 Improved and More Successful Negotiations 130 Only Cost Advantages Generate Price Advantages 131 The Fastest Cashiers in the World 132 Shoplifting 132 Store Interiors and Product Placement 133 Logistics 133 Bills of Service for Maintenance Workers 134 Personnel Performance and Productivity 134 The Principle of ALDI Stores 135
Part 4
ALDI Today: A Glimpse of the Future
139
From Discounter to Cult Object 140 Activities Abroad 143 Success of Hard Discount all over the World 144 The Outlook 146 Computers Are Elbowing out Beans 147 Will ALDI Remain Uncomprimising? 147
Notes
149
Index
151
Bibliography
154
