ALDI unveils $3.4bn expansion plan: 'We’re growing at a time when other retailers are struggling'

Picture: Brandon King, Flickr

As Lidl prepares to open its first US stores this week, German rival ALDI has unveiled a $3.4bn plan to expand its US store base to 2,500 by 2022, on top of a $1.6bn store remodeling plan unveiled in February to revamp 1,300 stores by 2020.

The expansion will create 25,000 new jobs and make ALDI the third largest grocery store by count in the US, serving 100 million customers a month, said CEO Jason Hart.

“We’re growing at a time when other retailers are struggling. We are giving our customers what they want, which is more organic produce, antibiotic-free meats and fresh healthier options across the store, all at unmatched prices up to 50% lower than traditional grocery stores.” 

Remodeled ALDI stores offer a more “modern and convenient shopping experience with a focus on fresh items, including more robust produce, dairy and bakery sections,” said the company, which currently operates nearly 1,600 stores in 35 states.

Described by Hartman Group as probably “the most underestimated grocery retailer ” in the US, ALDI’s strength comes from its high-quality, but limited assortment (around 1,400 SKUs vs the typical 30,000+ in a regular supermarket), of primarily private label products at low prices – made possible in part because of its low overheads and no frills approach to food retail.

For example, at ALDI there are no counter service departments as everything is packaged and self-service (you bag your own groceries). As product is wheeled in on pallets by forklift, shelf stackers are not needed. Carts require a 25c deposit, so shoppers return them (so staff don’t have to); there are no baskets to manage; and opening hours are slightly more limited than rivals (typically 9am to 9pm).

Who shops at ALDI?

The only staff at ALDI – which entered the US market in 1976 - are forklift operators, a cashier or two and possibly a third-party loss-prevention agent, notes Hartman Group, which also noted that “ordinary middle-class Americans,” shop there. “The ALDI proposition is not one that uniquely orients to struggling, down-market consumers. In fact, its primary shopper base looks virtually identical to Walmart’s.”

ALDI is also beginning to appeal to midmarket and upmarket consumers, developing a proprietary LivGfree gluten-free range and a natural and organic range called SimplyNature, introducing healthier checklanes (replacing candy with nuts, trail mixes, dried fruits and granola bars), formulation changes (no MSG, synthetic colors, and partially hydrogenated oils from private label lines), organics, and more fresh produce.

It has also begun to selectively add in national brands in specific categories, presumably where it has been unable or unwilling to invest in a private label equivalent.

Privately held by brothers Theo and Karl Albrecht, ALDI Group (which also owns Trader Joe’s) is Germany's leading grocery store chain and a leading player in the global retail food industry.

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"The ALDI proposition is not one that uniquely orients to struggling, down-market consumers. In fact, its primary shopper base looks virtually identical to Walmart’s," says Hartman Group.

Is ALDI the ‘most underestimated grocery retailer in the US?'

Picture: Flickr, Brandon King

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"The remodeled stores are going to look a lot like [its] new locations," forecasted  Mike Paglia, director of retali insights at Kantar Retail Amercias. Photo: ALDI USA

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Comments (1)

Gene' Klingler - 12 Jun 2017 | 08:48

They now take credit cards at the Columbus, Ohio Aldi's

Two weeks ago while shopping at Aldi's I was short on cash and said to the cashier, "You still don't take credit cards, do you?" and she replied, "We do now." So I used my Mastercard credit card for the first time at Aldi's. The Aldi's I was shopping at was located on the near west side in Columbus, Ohio.

12-Jun-2017 at 20:48 GMT

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