Aldi focuses on fresh and organic in expanding product selection
As Aldi upgrades its stores and adds new ones, it will boost the selection of fresh food by 40 percent in the coming year.
September 11, 2018
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In perhaps the most intense competitive period ever for the U.S. supermarket industry, Aldi stands out from the crowd.
Supermarkets were already grappling with stiff competition from multiple channels—discounters, warehouse clubs and drug, dollar and convenience stores, among others—when in August 2017 Amazon turned retail grocery upside down with its acquisition of Whole Foods Markets.
The e-tail giant’s entry into brick-and-mortar grocery led supermarket operators of all stripes to rethink pricing and store counts, enhance their in-store experience, and fast-track plans for online grocery shopping and delivery. Amazon’s disruption, too, has clipped grocery retailer stock prices, contributed to store closings and retailer bankruptcies, and pushed industry leaders such as Walmart and Kroger to shift gears and step up investment in e-commerce.
Aldi, meanwhile, is sticking to a formula that has propelled rapid growth and lifted the German hard-discount grocer into the top rungs of the U.S. retail grocery market by number of stores.
The retailer, whose U.S. headquarters is in Batavia, Illinois, offers a unique, curated selection of high-quality private label products in a compact store format and attracts customers with hard-to-match, everyday-low prices and a simplified shopping experience that eschews promotional frills.
Now with about 1,800 locations in 35 states, privately held Aldi is more than a year into a $5.3 billion, five-year expansion program that will enlarge its store base by almost 50 percent and upgrade most of its stores. Dovetailing with that initiative is a major product expansion, announced early last month, in which 20 percent of items in every store will be new versus a year ago.
CEO Jason
Because of Aldi’s brow-raising growth and success with a well-disciplined business model that’s resonating with consumers in a time of industry turbulence, Supermarket News has named the company its Retailer of the Year for 2018.
“Aldi is really clicking on all cylinders right now. At a time when other retailers are struggling, Aldi is thriving, we’re investing and most importantly we’re better meeting the needs of our growing customer base. We’ve always been growing steadily, but more recently we’ve accelerated our growth plans due to the rising demand for Aldi,” Hart told SN in an interview.
“Customers recognize that the more convenient we can make Aldi and the more products they can buy at Aldi, it saves them more time and more money,” he said.
On the growth track
Last year, Aldi opened 135 new stores, and in 2018 the retailer is aiming for 150 new locations. The company in June 2017 unveiled a $3.4 billion expansion plan that by the end of 2022 will broaden its retail base to 2,500 stores—serving 100 million shoppers per month, up from over 45 million currently.
“Our plans are to continue on this aggressive growth track by answering consumer demands regarding where, how and what they want to shop for,” Hart said.
In February 2017, Aldi embarked a $1.9 billion program to remodel and expand more than 1,300 stores by 2020. The remodels bring a more modern design, open ceilings and natural lighting plus more refrigerated space for fresh foods, including enhanced produce, dairy, meat and bakery sections. The chain’s stores average 12,000 square feet of selling space and keep the shopping trip simple with only five aisles to navigate.
“We’ve been investing heavily in our existing network of stores. We’re remodeling and expanding our entire network of stores over a three-year time period. What that’s doing is giving us a little more space to merchandise our products. On average, it’s giving us 20 percent more salesfloor square footage,” Hart said. The redesign features more refrigerated space for fresh foods and an enhanced produce selection.