Aldi Vs Costco: All Your Questions Answered

Aldi and Costco are two huge players in the grocery industry. At the time of writing, Aldi boasts 2,399 American stores, nearly 1,000 more than it had 10 years ago. Costco is also thriving, boasting a brand value that exceeds $60 billion. Both of these companies have found their success by giving customers exceptional value for their money. However, despite their similarity, both Costco and Aldi offer two very different shopping experiences. In this article, we examine these differences, answering all the questions you may have about these two giant grocery store brands.

Understanding the characteristics of these two companies has never been more important as both are experiencing considerable growth in the U.S. and look likely to dominate the budget grocery store industry for the foreseeable future. With the cost of living remaining high across the U.S., more Americans are turning to budget grocery stores than ever before. This article aims to help you choose the right store or warehouse for you.

Answering which store is cheaper is difficult. Prices are always changing and the answer often hinges on which products are being compared. That being said, it is generally accepted that Aldi offers slightly cheaper prices on private label products, while name brand items are cheaper at Costco. However, it is important to note that, regardless of what they buy, customers often end up spending more at Costco than they would at Aldi for the simple reason that most Costco items are sold in bulk. As one customer succinctly wrote on Reddit, "I shop at both. So the thing about Costco is yes, it's cheaper, but you're buying a lot more, so you have to pay more upfront. Some people don't have the extra money to stock up or don't have the storage."

It must be said that the price differences between the two brands are often very slight, although several customers state that the quality of Costco's goods, for example meat, is far superior. This would suggest that, although slightly more expensive, Costco strikes a better balance between quality and affordability.

While it's contested which brand is cheaper, there is no doubt as to which one has the bigger stores. On average, Aldi stores in the United States range from 18,000 to 22,000 square feet. The average Costco, on the other hand, stands at around 146,000 square feet; that's over six times larger than the average Aldi. This large size is driven, at least in part, by consumer demand, with older warehouses having to be expanded in order to accommodate the increased traffic they are experiencing.

In contrast, Aldi is focused on keeping all its stores as small as possible. This allows the company to minimize operating costs in a number of ways, from keeping electricity bills low to reducing the number of employees that are working on each shift. These savings are subsequently passed on to Aldi's customers via the grocery store brand's bargain prices.

Given that its stores are much smaller, few people will be surprised to learn that the average Aldi carries fewer products than the average Costco. Usually, an Aldi store stocks around 2,000 products, while a Costco routinely stocks 4,000. Both of these are considerably less than the 30,000 to 40,000 stocked by most other grocery store brands.

Given that it only stocks around 2,000 products, many people are skeptical that they will find everything they need at Aldi. However, consumer savings expert Lauren Greutman refutes this. In an interview with NBC News she highlighted that most product categories are covered. "People need to know that they have one of every type of product. You're not going to have a huge list of peanut butter to choose from. There are different kinds of cereals but not everything you want."

For those that want freedom of choice without compromising on price, Costco's 4,000-strong product count offers a nice compromise. This number is large enough that different versions of a product are often stocked, while it is small enough to ensure sales of each product remain high. This is hugely important to the brand's business model; limited choice all but guarantees a large quantity of sales giving Costco the ability to aggressively negotiate on prices with its suppliers.

It is well known that Costco is a wholesale club. This means that anyone wishing to shop at a Costco location must become a member first. Becoming a member is simple — all customers have to do is pay an annual membership fee, which was recently increased to $65 a year for a Gold Star Membership or $130 a year for an Executive Membership. Costco maintains the importance of this fee. According to the company, this money is used to offset operating costs and ensures Costco can purchase goods from suppliers at incredibly low prices. Of course, these savings are passed onto the customers through the warehouse's low prices.

Aldi, on the other hand, has made a point of never charging customers to shop. The brand even went as far as releasing a spoof PR statement that read: "The cost to join? Zero dollars. Shoppers can also upgrade to a crown-jewel level membership with perks like USDA quality meat, fresh produce and premium, affordable, wine –- all for an additional zero dollars." Apart from being humorous, this statement was a clear jab at wholesale clubs such as Costco. With the proliferation of free to shop discount grocers across the United States, the pressure is now on these wholesale clubs to prove that their membership fee is worth paying.

Unlike many other grocery store and wholesale club brands, neither Aldi nor Costco accept manufacturer coupons. Both companies give the same reason: that they negotiate unbeatable prices with suppliers and thus enable their customers to save money that way. Aldi adds to this by pointing out that the vast majority of the products it sells are private labels and thus would not be covered by any manufacturer coupons anyway.

While Costco does not accept manufacturer coupons, it does issue its members-only deals via a warehouse savings book that is released monthly. These booklets list the huge number of reductions and sales that are going on at each Costco location at any given time. The only instance where Aldi offers something similar to this is during events such as grand openings. On these occasions, regional promotions, discounts, or coupons might be distributed. Usually, the coupons given out during these events also come with expiration dates.

Anxiety-inducing, wild, and ridiculously busy is how some Costco customers describe their shopping experience. So busy are the warehouses that it is not uncommon to see people fighting over parking spaces. The reason for this is simple: Costco has millions of members but only a few hundred stores. Exacerbating this imbalance is many members' habit of frequenting Costco warehouses multiple times per week. As such, it's not difficult to see why warehouses often get so busy that customers often share tactics on how to avoid the crowds.

Given that Aldi stores are much smaller than Costco stores, you would assume that they get even more crowded. However, Aldi has taken several steps to negate this issue. One is opening more stores. There are just under 2,400 Aldi stores in the United States at the time of writing and many more on the horizon; in 2023 Aldi bought 400 new locations in the Southeast and the company plans to add a further 800 nationwide by the end of 2028. The company also streamlines the shopping process, ensuring customers spend as little time in the store as possible. While making shopping at Aldi somewhat stressful, these processes have their benefits as food blogger Diane Youngpeter highlighted to CNN, "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. I can get in and out of an Aldi in no time."

Both Costco and Aldi are very tight-lipped about how they decide what products they sell at their stores. That being said, it's widely known that both companies customize each store's product offerings based on its location and the wants of the nearby consumer base.

Despite using store analytics to see which product types sell the best, the variations in Aldi's offerings from store to store are quite small, although products from regional brands, like El Milagro's tortilla chips, are often stocked by Aldi stores in the local area. However, variations between Aldi stores do not pertain to product availability alone. Customers have noted that the same product, stocked at two nearby Aldi stores, often varies in price.

The difference between Costco store offerings is often more dramatic, with many products being stocked with the local consumer base in mind. One person noted on Reddit, "Ethnic foods will commonly be shipped to locations where there is a high demand for such products. For example, the Surrey, British Columbia Costco has a large selection of foods from India, while the Alderwood Costco has lots of foods from South Korea." This often results in significant differences in product offerings between nearby Costcos, especially in cities, where demographics can completely change from neighborhood to neighborhood.

It is no secret that Costco locations boast an exceptional food court. Here, customers can purchase pizza, sandwiches, and the company's much celebrated hot dog and soda combo meal. Aside from feeding hungry shoppers on the cheap and causing food writers to wax lyrical, the Costco food court plays an enormously important role in the company's appeal. In an interview with CNN, business analyst Timothy Campbell highlighted this, saying, "Food courts are a part of the larger Costco ancillary and service ecosystem intended to make the club a top-of-mind solution." This ancillary also includes the brand's gas stations and pharmacies.

Aldi, on the other hand, does not provide non-essential services in an effort to keep its prices as low as possible. This means the stores do not have food courts, pharmacies, or banks. While keeping the store as stripped back as possible is a solid economic choice, it undoubtedly leaves customers used to the Costco treatment desiring a little bit more from their shopping experience.

Aldi does not offer a loyalty card or rewards program, making it an anomaly amongst major retailers. Apparently, Aldi avoids loyalty programs because it would introduce complexity into the company's operating system and, ultimately, cost money to implement. What's more, the company feels like it can make up for this shortfall in other areas. In an interview with PYMNTS, Teresa Turner, Aldi's retail payments leader, said, "We don't have a traditional loyalty program, so we have to rely heavily on other areas. We have quite a bit of social media presence with people loving our ALDI finds, and they tell us what they like and what they don't like and what they want more of."

In contrast, Costco offers a generous rewards program for its executive members wherein they earn 2% on certain purchases. This reward is given to customers on an annual basis and is only capped at $1,250. However, it is important to note that Costco's gold star members are not eligible for this rewards program or any other loyalty scheme, putting these customers on a bar with those who shop at Aldi.