Aldi and the German Model: Structural Change in German Grocery Retailing and the Success of Grocery Discounters

Abstract

Most accounts claiming that there is a distinctive ‘German model’ have focused on manufacturing industries. Less attention has been paid to the service sector, in part because of the claim that many services are not exposed to the international economy. This article examines one service industry in Germany, grocery retailing. This industry is of interest because its most successful firms – the ‘hard discounters’ such as Aldi – deviate from the manufacturing model of production along at least two dimensions: labour relations and product policy. Nevertheless, the hard discounters are very successful, both domestically and abroad. The explanation for the success of the hard discounters offered here is based on both an institution central to Germany – the Mittelstand – as well as industry-specific factors. This complexity cannot be neglected when analysing changes in the German economy