Retail Leader - May/June 2018 - 8

> GROWTH AND BUSINESS DEVELOPMENT

Aldi Accelerates Growth
THE GERMAN GROCER'S ONWARD MARCH CONTINUES AND WITH FEW VISIBLE
WEAKNESSES, COMPETITORS SHOULD BE CONCERNED. > By Gina Acosta

W

Warm, soft lighting shines on the organic
And yet the value of that small format, easyapples and asparagus. Boxes of gourmet
to-shop store is in and of itself an undervalEuropean chocolates beckon near the aisle
ued benefit to who they are."
of Mexican and Kosher foods. Shoppers
Aldi, which includes Aldi Sud and Aldi
pick up refrigerated Thai-style meal kits,
Nord, today is one of the biggest retail
designed to feed two people, and put them
groups in the world, with more than
in their new, oversized carts. Cruising
10,000 locations, businesses in 18 countries
around an assortment heavy on organics
and estimated 2017 annual revenues of $88
and premium foods, one might expect the
billion, according to Kantar Retail. Aldi Sud
shopping carts at this store to be labeled
operates Aldi stores in the U.S. Aldi Nord
"Whole Foods Market" or "Mariano's." But
owns the Trader Joe's chain, which has
the shopping cart handles say "Aldi."
fewer stores than Aldi but is better known
Welcome to the new Aldi. It's nothing
in the U.S. Concentrated in the eastern half
like the old Aldi. The dingy floors, dim
of the U.S., the company has been openlighting and long lines have been replaced
ing stores in California and other western
by a shopping experience that could be
states since 2016.
Jason Hart, CEO of Aldi U.S.
called "Whole Foods lite." At a recent Aldi
Last June, Aldi announced a $5 billion
opening in Tampa, Fla., characteristic of
plan to remodel or expand its U.S. footAldi's latest store design and merchandising approach, shoppers
print by nearly 50% to 2,500 stores by the end of 2022. It ended
strolled past fancy flat-screen signage focusing on fresh items.
2017 with approximately 1,750 stores, up from about 1,200 five
Robust produce, dairy and bakery sections complemented the
years earlier, and expects to have 2,000 stores in operation by
quick and easy checkout lanes.
the end of this year. The initiative - which will make Aldi the
The new and improved shopping experience is part of the
nation's third-largest food retailer by store count, serving more
retailer's new value proposition for the U.S. consumer: Aldi is
than 100 million customers per month - is bringing a modern
betting $5 billion it can win over Americans by offering nicer
design to new and existing stores, with open ceilings, natural
stores that are bigger, but not too big, and a tailored assortlighting and environmentally friendly retail practices, such as
ment of inexpensive quality private label products. The formula
energy-saving refrigeration and LED lighting.
represents a huge competitive challenge, although it is one that
Aldi's timing couldn't be better. Its new format is expanding
receives less attention than Amazon and the recent revelation
at a time when time-starved, convenience-minded U.S. shoppers
about having more than 100 million Prime members.
are drawn to smaller format stores.
Discount retailers such as Aldi and its aggressive plans for
DOING 'SMALLER' BETTER
growth have created a new competitive dynamic. And like AmaAldi's key point of differentiation has always been price. On
zon, it is altering shopper expectations around price, brand, asa basket of 30 typical household items, Aldi's prices are on
sortment, and service. It is a scenario that has played out in Europe
average almost 17% lower than Walmart's, according to a 2017
where competition from the likes of Aldi as well as Lidl is being
study conducted by Customer Growth Partners. Aldi's reliance
credited as a driving force behind Walmart's decision in April to
on private label makes such comparisons inherently difficult
merge its Asda divisions with Sainsbury's. The deep-discounters
but it also reveals a key insight that value conscious shoppers
have disrupted the U.K. supermarket sector severely begging the
trust the retailer as much, if not more, than the brand and are
question of whether the U.S. market is next.
willing to substitute.
"Aldi is the most underappreciated solid performer in retail,"
Aldi gets high marks from U.S. customer satisfaction surveys,
said Diana Sheehan, VP, Retail and Shopper Insights Retail, Sales
including the 2018 Harris Poll Reputation Quotient, in which Aldi
and Shopper Practice, Americas, Kantar. "They have a unique value
ranked tenth, behind notable companies such as Amazon, Wegproposition that is fundamentally founded in price-based value.

8

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Table of Contents for the Digital Edition of Retail Leader - May/June 2018

Contents
Retail Leader - May/June 2018 - Cover1
Retail Leader - May/June 2018 - Cover2
Retail Leader - May/June 2018 - 3
Retail Leader - May/June 2018 - Contents
Retail Leader - May/June 2018 - 5
Retail Leader - May/June 2018 - 6
Retail Leader - May/June 2018 - 7
Retail Leader - May/June 2018 - 8
Retail Leader - May/June 2018 - 9
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Retail Leader - May/June 2018 - S1
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Retail Leader - May/June 2018 - Cover3
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