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Business

The American Way of Aldi

A U.S. business magazine telling Americans to “Buy German?” This strange but true Forbes headline recently highlighted one of the biggest German success stories in America: Trader Joe’s.

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For many Americans, Trader Joe's has become a way of life, like California's beaches.

Europeans have long been fans of the no-frills discount bins at Aldi supermarket stores, which offer everything from champagne to cut flowers at prices often steeply discounted from those of competitors. But few here are familiar with Trader Joe’s, Aldi’s upmarket American discount chain, which has seen incredible growth in recent decades.

Since 1977, the company has been owned by Theo Albrecht, the billionaire behind the Aldi Nord supermarket chain. Trader Joe’s has more than 200 stores across the U.S. and rings up an estimated $2.1 billion in annual revenues.

Strike brings boom

The company’s fortunes climbed even further this winter, as 75,000 grocery clerks in Southern California abandoned their cash registers after the state’s largest supermarkets, including Albertson’s, Kroger and Safeway, sought to reduce their health insurance and pensions. Uneager to cross the picket lines, many consumers poured into their local Trader Joe’s instead.

A non-union company, Trader Joe’s pays its employees an average of $21 per hour compared to the $17.90 paid by the union shops. The company also offers employees health insurance and retirement benefits. Its generous labor practices and environmentally-conscious products offer customers just the mix it needed to make the jump from larger grocery stores to a smaller shop with a more refined selection.

Though the company -- owned by the famously reclusive Theo Albrecht, who with his brother is estimated to be worth $26.5 billion -- is mum when it comes to discussing finances, Forbes recently estimated that Trader Joe’s 74 stores in California have experienced a jump in revenues of 30 percent since the strike began.

Worldly pleasures

As other cashiers have taken to the picket lines, Trader Joe’s workers have continued ringing up dried fruits, European cheeses, meats and vegetables in their trademark Hawaiian shirts -- a symbol of the company's casual and laid back style.

But the cashiers and products aren’t the only thing that differentiate Trader Joe’s from the competition. Like Aldi, more than 80 percent of the products sold at Trader Joe’s are produced by other companies but sold under the Trader Joe label. The company sells its wares under the Trader Giotto, Trader Jose, Trader Ming and Trader Jacques brands among others, representing the store’s hefty international lineup of goods.

Trader Joe’s also partners with wineries to bring high-quality but low-cost wines to its outlets, like Charles Shaw, otherwise known as "Two Buck Chuck," which has taken America by storm. Between 20-25 percent of Trader Joe’s products are imported from overseas.

A different kind of customer

The nautically themed stores, where managers are called captains, also attract a different kind of customer than the average supermarket. The German newsweekly Der Spiegel recently described them as "yoga-crazed, Bush opponents or ballerinas." Others have described it as one-stop shopping for "Bourgeois Bohemians," the socially conscious, well-educated middle class with income to spare.

The fact that the company steers clear of more controversial foods, like duck, whose breeders animal rights activists accuse of animal abuse, also makes it an obvious choice for more socially conscientious customers.

Aldi Lebensmittelkette

Aldi supermarket

The success of Trader Joe’s isn’t the only Albrecht success story in the United States. Aldi itself is a growing brand on the other side of the Atlantic. Since opening its first store in 1976, Aldi has expanded its presence to 671 stores in 25 states. According to a 2002 study by the Agricultural Marketing Resource Center at Iowa State University, Aldi ranked as the #21 supermarket chain in the U.S., with estimated revenues exceeding $3 billion annually.

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