We finally know how Aldi keeps their prices so low

Aldi isn't your traditional supermarket. There's cardboard boxes for shelves, wine bottles for $3, and shopping carts that you can rent for a quarter. Shoppers bag their own groceries, and employees don't spend much time restocking. Stores are relatively small and you may not recognize many of the brands unless you're a regular. With more than 1,800 stores in operation nationwide as of this writing, the discount grocer is on track to becoming one of the top grocery store chains — third behind Walmart and Kroger — with 2,500 locations projected in 2022, according to CNN Business.

With all this growth, you might be wondering how the German-based grocer manages to keep its prices so low. Well, much of it is a result of Aldi's shoestring operation, which we'll get into. All those savings at the top trickle down to savings for the shoppers — and that's all done without infringing on quality. Aldi CEO Jason Hart told CNBC Markets that shoppers "are saving money on high quality products in a convenient, less frustrating shopping environment." So let's break it down and see exactly how Aldi keeps its prices so low.

Aldi's quarter system is key to keeping prices low

Aldi keeps prices down, in part, by employing a small workforce. In fact, that small workforce is the reason you'll have to insert change to use an Aldi shopping cart. If at any point you want to use a cart to navigate the store, you'll "rent" one; a quarter unlocks a cart from the corral at the front of the store, The Penny Hoarder explained. But don't worry about losing your money. As you're only renting the cart, you'll get your quarter back once you return the cart to the store. Considering shoppers do the work of putting the carts away, Aldi save money by not hiring cart attendants to gather them from the parking lot.

Aldi may be most popular for this cart system, but the chain isn't the first to use this tactic. CNN Business reported that other grocers throughout the United States tried to implement the system back in the '80s and '90s, but quickly gave up as it frustrated their shoppers. Yet and still, Aldi has never wavered from the quarter-cart model. In fact, it was in place when the first American Aldi opened in Iowa in 1976 and, according to CNN, the company credits the system for helping keep prices so low.

Aldi keeps prices so low by putting its shoppers to work

For better or for worse, Aldi is able to keep prices low by making the customer work. Not only will you be in charge of putting your cart back where you found it, but Aldi also has customers bag their own groceries, CNN Business explained. In doing so, cashiers are able to process more transactions as they don't have to pause to bag. Subsequently, the chain doesn't need to hire as many cashiers. And, of course, that means the chain saves money — and some of those savings are passed on to the consumer.

So, how exactly do you bag your own groceries at Aldi? You have several options: You can purchase plastic and/or reusable bags at the store, bring your own bags, or opt for empty cardboard boxes, which may corralled in an area within the store. While it may not be as glamorous as having your groceries bagged by someone else, it's part of how Aldi keeps prices low. Not to mention, it also saves you time.

"Those lines fly. You're not waiting for people to bag. They're not messing around there," Baltimore-based food writer Allison Robicelli told CNN. "Once you see that kind of efficiency, it makes going to other supermarkets really annoying and really tedious."

Each Aldi store employs a tiny, multitasking workforce to lower prices

While shopping at Aldi, you might notice a limited number of employees compared to large supermarkets. You probably won't see an employee taking calls, either. As CNN Business reported, most Aldi stores don't even have a public phone number so as to avoid employees spending time on calls with customers. In an effort to save both time and money, all employees are also cross-trained in order to perform every task. That's important to the store's success because one Aldi store might only have three to five people in it at any given time, and only between 15 to 20 total store employees on the payroll, according to CNN.

Having a small and efficient workforce ultimately saves the chain a ton on labor costs and those savings trickle down to the customers. While Aldi strips down a lot of things you may have come to expect from a grocery store, Katrijn Gielens, marketing professor at UNC's Kenan-Flagler Business School in North Carolina, told CNN Business they do so "without compromising on quality."

Aldi keeps prices so low by using cardboard boxes and crates to display products

Walk into a large grocery store and you'll find products displayed on shelves pretty much everywhere. That's not the case at Aldi, which often makes makeshift shelves using the same crates and cardboard boxes in which products are shipped, CNBC's Make It revealed. It may not look as pretty, but Aldi and its customers save some coin thanks to this practice.

According to CNN Business, this money-saving tactic also saves employees the time it takes to unpack boxes and stock shelves since the products are already in place. This is just one of the many strategies Aldi utilizes to keep prices low and make people feel better about their purchase, Walmart CEO Gregory Foran recognized. "People love saving money on staples," he further acknowledged at an industry conference in 2019. "You feel pretty good if you can save $10 on your grocery bill because it makes you feel better when you go out for dinner on Saturday night and spend $200 at a restaurant." If boxes are what help you do that, then so be it, right?

Aldi cuts production costs to sell wine for super low prices

If you're a wine connoisseur on a budget you probably already know about Aldi's deliciously cheap wine collection. This is, after all, the same chain that goes viral any time they announce a new boozy drink, like its award-winning rosé, which retails for the shockingly low price of $8 a bottle. In fact, an Aldi representative told Eating Well that about 90 percent of the German-based chain's wines are priced under $10.

It's true that wine doesn't have to cost an arm and a leg to taste good, but how exactly does Aldi sell high-quality wine for $3, $5 or $10? It's all in Aldi's business strategy. Aldi partners with companies that own their vineyards, which means the grocer isn't paying any overhead to create the boozy product, Eating Well reported. Also, Aldi typically works with winemakers who use machine pickers as opposed to hand-picking, which ultimately saves time and cuts down on costs.

Aldi keeps stores small to keep prices low

It doesn't take long to do grocery shopping at any Aldi store. According to CNBC Markets, Aldi's stores are "one-fifth the size of a typical supermarket" with a few wide aisles and 12,000 square feet on average. This works for many consumers, like Aldi Nerd blogger Diane Youngpeter, who told CNN Aldi's simple layout helps her shop more efficiently. "I'm a busy mom. I don't have time to navigate a huge grocery store with kids begging to get out and go home," Youngpeter explained. "I can get in and out of an Aldi in no time. I'm not sifting through 50 different varieties of salsa."

Thanks to its smaller size and minimalist layout, Aldi saves money on real estate and labor costs , per CNN, and it doesn't have to carry as many products as its competitors. Typically, an Aldi store carries around 1,400 items versus traditional grocery stores and superstores, which can carry anywhere between 40,000 to over 100,000 items.

Aldi keeps prices low by being eco-friendly

Aldi has found a way to keep its prices low by reducing its energy consumption. According to Aldi's website, the grocer is always looking for ways to make less of a carbon footprint while saving money. How? Aldi has solar panels installed at stores and warehouses and has stores equipped with LED lighting and sustainable refrigeration. Every Aldi warehouse uses ammonia, which is "a natural refrigerant with a Global Warming Potential of zero," in its refrigeration systems, according to Aldi

Aldi is big on solar energy. In 2018 alone, according to Aldi's website, its solar panels minimized the grocer's release of CO2 emissions equivalent to "15.6 million pounds of coal being burned." The grocery chain is also big on reducing plastic. "Aldi has never offered single-use plastic shopping bags. And while we're pleased that we've helped keep billions of plastic grocery bags out of landfills and oceans, we want to continue to do more," Jason Hart, CEO of Aldi U.S., revealed in a 2019 press release. Aldi has also saved money on shopping bags as they charge customers for bags and encourage them to bring their own. 

No music equals low prices at Aldi

Perhaps you've already noticed this, but it can be oddly quiet in Aldi stores as there's never any music blaring in the background. The German-based grocer has a very smart, cost-effective reason for not playing music, Kristin McGrath, shopping guru and editor at Offers.com, told Reader's Digest."There's been research that suggests playing relaxing music in stores makes customers relax and browse more, which is why many stores play music," she said. But unlike some other grocers, Aldi doesn't want to spend money for a third-party licensed music service. "People are there to save as much money on essentials as possible, period," McGrath added. And music would essentially take some of that away from customers. 

Jenna Coleman, founder of Particular Pantry, told Reader's Digest, "As someone who shops at Aldi every week, I am very familiar with the many things Aldi does to cut costs," she said. "Not playing music in their stores is just another line item they aren't passing onto their customers." So if you're looking for music during your shopping trip, better pop in those earbuds. 

Aldi avoids stocking big brands to help keep prices low

You won't see a whole lot of brandname products at Aldi, but that's vital for the grocer to save you money. According to a CNBC report, Aldi stocks more than 90 percent of private-label goods, including brands like Simply Nature and Fit & Active. Just because most of Aldi's products aren't brandname, that doesn't mean they aren't of high quality. "We test our products to meet or beat the national brands' quality," Aldi spokesperson Kate Kirkpatrick told Taste of Home

Even if you're into name brands, these private-label products aren't really all that different. According to CNN Business, Aldi's Honey Nut Crispy Oats are even displayed in boxes that look very similar to that of General Mill's Honey Nut Cheerios. "I think right now, the key for us is, consumers are appreciating more and more private label," Scott Patton, Aldi's vice president of corporate buying, told NPR. "They're absolutely recognizing they can get great quality product at a great price." However, Aldi isn't alone in this. Other grocers like Costco have also found success with their private-label brands, according to CNN.

Aldi buys from local farmers to keep prices so low

Much of the organic produce you find in your neighborhood Aldi comes from local farmers. According to Aldi's website, the German-based grocer "[teams] up with local farms to help [customers] get the freshest produce at low prices." But how do you know a product is locally sourced? Every item that comes from a local farmer is marked with a "locally grown" logo. You can even find locally-sourced craft beer, bread, and meat at Aldi stores. 

Buying local is both good for the planet and good for your wallet. Aldi is able to cut costs on transportation, as reported by Taste of Homewhich not only saves money but lessens the impact on the environment. Every Aldi store receives fresh produce shipments on a daily basis and between five to 10 percent of those products are locally sourced, Tom Cindel, group director of operations/logistics for Aldi's Moreno Valley area, confirmed to NBC 7 San Diego. This is a win-win for the grocer and its customers. As Cindel explained, "People are savvier about what they eat and how much they're willing to pay for food."

Aldi keeps prices low on organic foods across the board

Fruits and veggies are the most commonly purchased organic products at any grocery store, according to a survey from Earthbound Farm, and Aldi is no exception. Though typically organic items do tend to be pricier, a CNBC Make It report found that Aldi sells USDA organic foods cheaper than its distant cousin Trader Joe's as well as competitors like Walmart and Whole Foods. Now more than ever, organic products are in demand, especially with Millennials and Gen Z shoppers, who reportedly purchase organic food "all the time."

While Aldi's business model focuses on low prices, it doesn't mean quality isn't just as important as value. John Karolefski, editor of Grocery Stories, told CNBC that Aldi delivers on both. "Aldi, happily, has a lot of good quality, good-tasting products at good prices," Karolefski said. "It's one of the reasons they've been so successful in the U.S." 

Keeping variety low and volume high helps keep prices down at Aldi

One thing every regular Aldi shopper knows is that they won't necessarily find a dozen options of, say, ketchup at their neighborhood store. Aldi stores carry a "limited assortment" of products at a "significant volume," according to its website. This enables the chain to land good deals with suppliers and provide low prices to its customers, as reported by NPR

Scott Patton, vice president of corporate buying at Aldi, told NPR that unlike traditional supermarkets, Aldi "[has] been involved in being a low-price leader since Day 1." He continued, saying, "Because of the way we structure our business ... we are comfortable that we will come out as a leader in the price war."

One of the many ways Aldi leads that "price war" is by limiting how many brands the chain carries. So the next time you find yourself doubting the quality of a super low-priced item at Aldi, know it's the result of the way Aldi does business and not reflective of the quality. 

Aldi stores keep prices low by closing early

Aldi doesn't generally follow the norm when it comes to operating a grocery store, and that includes its store hours. While other chains like Walmart keep the lights on for as long as 24 hours a day, Aldi turns them off not long after dusk. Visit Aldi's store locator page and you'll find most locations typically operate between 9 a.m. to 8 p.m., with some even closing as early as 7 p.m. 

It might seem like closing early would mean the chain loses out on potential sales, but closing early actually saves you — and Aldi — money. According to Taste of Home, Aldi's hours of operation allow the German-based grocer to "save on wages and reduces operational costs," thus providing more savings for its customers.

"Aldi is perfectly positioned as the low-priced leader," Burt Flickinger, managing director of Strategic Resource Group, told CNN Business in May 2020. "A family with five kids and a rescue pet spending $200 a week of groceries at a typical supermarket chain is spending $120 to $140 a week at Aldi."