Posts tagged with "Store brands"

Cheap thrills: How discount grocery chain Aldi is giving fancy supermarkets a run for their money

December 9, 2019

For years, Amber Walker held a dim view of Aldi, the discount grocer whose U.S. headquarters sits just a mile from her Batavia home, outside Chicago.  She associated it with dented 10-cent cans and no-name brands. She did not understand why, of all things, it also sold hammocks.

But Walker’s negative perception swiftly changed after her first visit to Aldi in decades in 2016, when the chain started accepting credit cards, and she found not the dingy floors from her childhood memories but a budget Shangri-La, The Chicago Tribune reports.

She could buy a week’s worth of groceries for her family of four for less than $100, and discover treasures in an aisle dedicated to random rotating items that “I don’t need but can’t live without.” Aldi, at least in Walker’s eyes, got even better when it broadened its limited selection to include more fresh, organic and high-end products—still at steep discounts— while undergoing an aggressive national expansion and chainwide remodeling blitz. Walker’s store in Batavia, renovated in 2017, even got a bakery.

Indeed, today, Aldi—which operates more than 1,900 stores in 36 states—takes what it calls “a simple, cost-effective approach to grocery shopping that saves [customers] on their grocery bills.” The store claims to save  shoppers up to 50% on their weekly must-haves by offering Aldi-branded goods—many of them manufactured by the nation’s leading food producers—instead of  name brands.

As a spruced-up Aldi climbs toward its goal of having 2,500 stores by 2022—which would make it the third-largest grocer in the nation by store count—converts like Walker are putting aside old perceptions of the brand and embracing the no-frills ethos that allows Aldi to sell quality products for cheap.

Although, The Chicago Tribune reports, behemoths like Walmart and Kroger continue to dominate the market, they are watching their backs as the German-born chain reshapes expectations of the shopping experience.

“I’m always shocked at what I can get for the cost,” said Walker, 37, an animal trainer who previously did her regular shopping at Walmart, Meijer, Costco and Super Target. “Aldi gets my business first, and then I will fill in holes elsewhere.”

Known for cost-saving measures—such as requiring customers to bag their own groceries and pay a quarter deposit to access a grocery cart—Aldi says its customer base has swelled as it modernizes its digs and broadens its selection to include items like fresh salmon, organic strawberries and artisanal cheeses.

At remodeled stores, which have been expanded to fit a bigger produce and fresh foods section, customer traffic has increased by 30% to 40%, Scott Patton, vice president of Corporate Buying told the Chicago-based news outlet.

“The more variety of products we carry, the more customers view Aldi as a place they can do their first shop of the week,” he said. While shoppers still have to go elsewhere for fresh ginger or water chestnuts or organic tofu— though Aldi is testing the latter—and can’t get a single lime without buying a one-pound bag, Patton said Aldi should cover 90% to 95% of their grocery list.

Aldi is ending the year with 2,000 stores, including 160 in the Chicago area, its largest market by store count. It has completed 70% of its $180 million in planned local renovations and is gaining ground on Jewel-Osco, the biggest local player, which has 188 stores in Illinois, Indiana and Iowa.

And the outlook is excellent: In a report last year, Morgan Stanley said one in five customers who recently switched grocery stores took their business to Aldi, a greater share than opted for Costco, Kroger, Target and Whole Foods. Walmart, the market leader, got 30% of switchers, but that was flat from the prior year while Aldi’s share was up significantly.

However, for all the Aldi nerds, there are plenty of people who prefer a more robust grocery experience, The Chicago Tribune says. Aldi does not have prepared hot foods or in-store dining options or butcher counters that shoppers value elsewhere.  At least, not yet.

“Would we ever have a piano player, a sushi bar or juice bar?” Patton said. “I would never say never. But I would say this: If we ever had any of those things, it would be the most efficient of our competitors, and we would do it better and faster than anyone else.”

Research contact: @chicagotribune