According to retail fair, Aldi is a German supermarket chain retailer founded by two brothers. Aldi's shops are very small, about 500 to 700 square metres, and the number of individual products in a single shop is also limited, about 500 at the beginning, and now there are only more than 1,000. Wal-Mart is a one-stop shop, with more than 200,000 items in a single shop.
In the 2009 Forbes ranking of the richest people, Bill Gates was ranked first, Warren Buffett was second, and Adi and his two brothers were in the top 10. I remember that in 2009, Bill Gates' personal wealth was $40 billion, and the two brothers together surpassed Bill Gates. The wealth created by the small Adi is amazing, but their company is very low-key. They have a principle that forbids the top to the bottom of the company to be interviewed by the media. Therefore, if you go to the Internet to search for photos of the two brothers, there are almost none. Forbes magazine spent two months in Germany to take photos of the two brothers, but still found nothing. From this company, I have learnt the true essence of business.
According to retail fair, the essential value of the whole business is good quality at a low price. The concept of "good quality" definitely means that the goods are of very good quality. Inexpensive means cheaper. The unity of these two things is value, and the numerator of the value formula is quality, and the denominator is price. If the better the quality and the cheaper the price, the better the price/performance ratio, this is a very simple common sense for almost everyone.
Assuming that the market retail price of a can of Coke is 4 yuan, it is actually made up of 4 parts: first, the cost of purchasing goods; second, the running costs (including staff, shops, etc.); third, taxes (taken by the state); and fourth, the shareholders' dividends. For simplicity, let's say that a can of beverage costs $1 to purchase, $1 to operate, $1 to tax, and $1 to pay dividends to shareholders. In order to find the real low price, Adi these four parts are falling. This is a huge departure from traditional business logic, and MBA classes tell us too much about business logic and methods, but Adi almost always says "NO." Adi only sells its own branded products.
Adi only sells its own branded products, not branded products. Adi looks for manufacturers around the world and produces products according to the quality of first-class brands, but with Adi's own brand name. Adi thinks that the real production cost of a drink that costs 1 yuan is only 20 cents, and more costs are not actually incurred in the production process: 20 cents of advertisement fees taken by CCTV, 10 cents of celebrity endorsement, first-class flights and five-star hotels for the company's executives, and various forms of marketing activities, etc., which are eventually added to the purchase price of the can of Coke. Adi thinks this is unreasonable, and that customers should not pay for CCTV or Yao Ming. Therefore, he wants to purchase a naked product, he wants the product itself, without any brand premium. So the cost of goods for Adi is naturally lower than other retailers. Let's say an MBA programme tells us that the most important thing for a retailer is location, and location comes first. He says no, he thinks the rents are wrong, and it all adds up to the retail price of the drink. So he chooses remote locations, keeps the rents down, and Adi has a very plain frontage, while keeping the retail price down.
Retail fair learns that they didn't even have POS machines in the early days, which he thought would increase the cost of goods. So the cashiers at Adi had to remember the prices of all 500 items. Later on, the POS system was added after calculating the efficiency of the work. Adi didn't have shelves. He thought shelves would add to the cost, and preferred to just stack the boxes there. Now all of our goods are packed in tightly packed boxes, but his carton packaging is only half, that is, half of the goods are exposed, so he doesn't have to spend manpower time to cut up the box, and the box is only half, so the cost is even lower.
Retail fair learns that Adi prefers door-to-door pick-up, and ships directly from the manufacturer. The tyres of the delivery vehicles are regularly polished so that they can run further; they even modify the angle of inclination of the windscreen because it reduces wind resistance and lowers fuel consumption.
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