What You Get at Discount Supermarkets: Fewer Choices, Better Prices

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Grocery stores such as Aldi and Save-A-Lot offer a tradeoff that plenty of shoppers can live with: Compared to a standard supermarket, they stock far fewer products, but, compared to a standard supermarket, shopping there can save you a ton of money.

The WSJ describes how these two discount chains have experienced big-time growth during our recessionary times. Save-A-Lot plans to double its number of stores, from 1,197 to 2,400 in the next five years. Aldi added 83 new stores in the U.S. over the past year, and is expecting to open another 72 by the end of 2010.

The WSJ story focuses mainly on how retail Godzilla Wal-Mart is strategizing an assault on the thriving discounters by opening up smaller, limited-option grocers of its own. But what interests me most are the details concerning what makes Save-A-Lot and Aldi successful—and cheap—in the first place:

A typical Save-A-Lot stocks just 1,800 items, 5% of a supermarket’s total. Roughly 80% are private-label products, and they are displayed on shelves in the cardboard boxes they arrived in to save labor costs.

“A typical grocer carries 100 types of mustard,” said Save-A-Lot President Bill Shaner. “We have just brown and yellow.”

Aldi stores carry 1,400 items, 95% of them private label. Though Aldi still offers an austere shopping experience, it has added fresh meat instead of just frozen, augmented its produce section and added healthy items to broaden its appeal.

I’ve never had the opportunity to shop in either of these stores, but I’m intrigued, even though I’m partial to good mustard and prefer my meat to be fresh—or at least frozen by me in my own freezer, so that I know exactly how long it’s been on ice. Candace Anderson, a friend of It’s Your Money whose money- and time-saving specialty is cooking a month’s worth of meals in just one day, is a big fan of Aldi.

The chance to save money is obviously appealing, but so is the idea that I won’t be overwhelmed by having to choose among 250 kinds of shampoo. Sometimes, it’s nice to see fewer options on the supermarket shelf. So long as they have good mustard, that is.

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