In the April issue of PL Buyer the German owned, Batavia, Illinois based discount grocer Aldi is named 2009 Retailer of the Year. In these trying economic times the selection of Aldi seems to be an appropriate selection, and in addition to that they have stepped up to lead Private Brandin in the value category where it had been nonexistent. I have written about them on several occasions including:
Interestingly enough another Private Brand leader, Trader Joe’s is owned by a family trust set up by German billionaire Theo Albrecht, one of the two brothers behind Aldi.
A Frugal Force
by Kathie Canning – April 13, 2009
ALDI’s no-frills approach, combined with a growing family of high-quality store brands, is winning over value-minded shoppers across the United States.
In these scary days of retail, where bankruptcies and store closings seem to occur on a daily basis, a success story has the power to intrigue and amaze us. And one particularly intriguing success story is that of Batavia, Ill.-based ALDI Inc., a retailer that – steadily and quietly – has been winning over a growing base of value-minded U.S. consumers.
ALDI Inc., PL Buyer’s 2009 Retailer of the Year, is part of the Aldi Süd division of the German ALDI company, but operates independently. The retailer first came to the United States in 1976 with a store in southwest Iowa, with the goal of bringing food to its customers at the lowest prices possible. Its first U.S. stores carried only about 500 products. Over time, the retailer added products, including more refrigerated and frozen foods, “special purchase” items and more.
Today, ALDI boasts approximately 1,000 stores in 29 states. Although its locations still rely on a “no frills” approach – products are displayed within their cardboard shippers; shoppers must supply or buy bags and pay a 25-cent (refundable) deposit to free up a cart – ALDI now offers more than 1,400 regularly stocked items. And 95 percent of those products are ALDI’s own items – presented under 118 select brand names.
Expansion remains a critical element on the ALDI agenda. In 2008, the company opened more than 100 stores, expanding into Florida and Rhode Island. The company also announced plans to open at least 75 more stores in 2009 and to enter into Texas in 2010. ALDI’s newest stores sport a pleasant pastel décor and higher ceilings that let in more natural light.
“ALDI today is opening in more attractive facilities in higher-income areas,” notes David Livingston, principal of Pewaukee, Wis.-based DJL Research. “They have evolved from catering to low-income groups [to catering] to all income groups.”
What’s more, ALDI’s new products continue to skew more upscale and innovative. Case in point: The retailer recently entered into the premium skin-care market with the introduction of its Lacura brand – an award-winning product line with European ALDI roots. And this year, ALDI’s Fit & Active brand became the first private label brand to include guideline daily amounts (GDAs) on product packaging.
“The ALDI shopping experience continues to evolve positively,” stresses Jim Hertel, a managing partner with Willard Bishop, a Barrington, Ill.-based retail and foodservice consulting firm. “They have long been operationally focused as a core part of being able to deliver such great consumer values – reduced SKU counts, low in-store labor levels, cut-case/pallet merchandising, etc. – but seem to be taking the shopping experience much more into account.”
Doron Levy, president of Richmond Hill, Ontario-based Captus Business Consulting, believes ALDI’s evolution coincides with that of private label branding as a whole.