German grocery brand Aldi is taking the U.S. by storm
German grocer Aldi has been doing business in Europe for over 100 years and has had a foothold in the U.S. since 1976.
Now, after decades of quiet, incremental growth in the U.S., the no-frills brand is on an absolute tear, holding down the top spot as the fastest growing U.S. grocery chain, by store count, for the last four years and on pace to hit 2,500 locations by the end of next year. Just a decade ago, Aldi had just under 1,300 U.S. stores.
For comparison, Walmart has over 4,500 stores in the U.S. while Kroger has more than 2,700.
Aldi has been hitting a demographic sweet spot among U.S. consumers thanks to its low price, store-branded goods and streamlined, small-footprint retail locations which are now in 38 states. Beside the smaller than typical footprint, similar to Trader Joe’s stores, Aldi also curates its offerings more than most grocers. While a major U.S. chain outlet may stock over 30,000 times per store, Aldi’s selections are whittled to around 1,600, per the Journal.
In a Wall Street Journal interview, Aldi president Dave Rinaldo shared a pared down description of his company’s pared-down approach to the grocery business.
“It’s about simplicity. It’s about efficiency. It’s about consistent experience, all the time,” Rinaldo said.
That simplicity includes a warehouse-style approach to keeping Aldi outlets stocked, with most goods offered on shelves right out of the boxes they were shipped in. The low-key merchandising and Aldi’s penchant for smaller store spaces helps minimize overhead costs, savings the company says get passed on to customers in the brand’s discount pricing.
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Rinaldo said the company has found great success with attracting new customers when the U.S. economy is in the doldrums, citing an influx of new, discount-hungry shoppers in the aftermath of the 2008 financial crisis that stayed with the brand even after the economy rebounded.
“What was really interesting is we never lost any of those customers,” Rinaldo told The Wall Street Journal. “As the economy improved and we had a really long run of economic improvement, Aldi grew throughout that entire period of time.”
Aldi is executing its growth strategy through both new store construction and acquisitions.
Back in May, the company announced plans to buy 397 supermarkets in the southeast operating under the Winn-Dixie and Harveys brands. Following the deal’s announcement, Aldi shared its plans to convert some of the newly acquired outlets into Aldi’s stores while others will continue to be operated as Winn-Dixie or Harveys supermarkets.
Besides the bulk-buying power the company enjoys thanks to its private label branding approach, Aldi’s also cycles through time-limited product selections that can range from food and housewares to clothing and seasonal items, according to Business Insider. The practice helps cultivate a “treasure hunt” mentality among its customers and encourages regular visits to catch the latest offering.
While most of the Aldi’s locations are east of the Mississippi, the brand appears to be marching west in its continued expansion across the U.S.
There are currently no Aldi’s locations in Utah.
