ALDI Named Retailer of the Year
In mid-October, ALDI looked to make a big splash with inflation-battered consumers by introducing price cuts on everything the American shopper needs for the holiday table: potatoes, green beans, cranberries, butter and flour, among other items. Truthfully, though, ALDI has been making a big splash with U.S. consumers for a long, long time.
Last year, Michael Hurd and Jessica Bojanowski proved their love for ALDI — and one another — by getting married in the produce section of the company’s flagship location in Batavia, Ill., after spending many months “dating” by shopping together at the store.
This past summer, more than 70,000 ALDI super-fans took part in the retailer’s annual Fan Favorites survey, declaring their love for 13 favorite ALDI products.
U.S. consumers seeking relief from high grocery prices — and seeking premium products not found anywhere else — have become obsessed with shopping the grocer, and in August, the company gave some love right back to its fans when it unveiled plans to acquire Jacksonville, Fla.-based Southeastern Grocers (SEG). The transaction, scheduled to close in the first half of 2024, includes approximately 400 Winn-Dixie and Harveys Supermarket stores throughout Alabama, Florida, Georgia, Louisiana and Mississippi, which means the fastest-growing grocer in the country just added more fuel to the rocket ship.
“Our acquisition of Winn-Dixie and Harveys Supermarket is a unique opportunity to accelerate our growth plans and bring us closer to our customers in the Southeast, a key market for us,” says ALDI CEO Jason Hart, one of several key senior ALDI executives speaking to Progressive Grocer, which chose the company as its 2023 Retailer of the Year.
The transaction adds to the retailer’s organic growth across the country, according to Hart.
“We’ve opened hundreds of stores over the past several years, with plans to open 120 new stores nationwide by the end of this year, bringing our total store count to over 2,400,” he adds. “This acquisition gives us speed to market with quality retail locations, great people and a solid core business in a fast-growing region of the country. Not only has the Southeast market experienced tremendous population growth, but it’s a region where we’ve already experienced strong customer demand for our stores. We see so much future upside with this acquisition and look forward to bringing more value to the customers, employees and communities we’ll now have the privilege of serving.”
[Read more: "ALDI Deal Strengthens Grocer’s Position in Southeast"]
Of course, value retailers perform well during times of economic pain and uncertainty. But ALDI is growing faster than any other grocer in the United States by expanding its assortment of fresh food, remodeling stores so that they’re easier to shop, curating assortments with premium — and frequently private-brand — products, infusing sustainability efforts across the business, and maximizing operational efficiencies in ways that allow it to keep winning the hearts and minds of the U.S. shopper.
Fastest-Growing Grocer
In 2017, ALDI, with estimated annual sales of $19 billion, said that it would invest $3.4 billion to accelerate store openings, with a goal of growing from 1,700 locations to a 2,500-store footprint by 2022. The onset of the pandemic in 2020 put a kink in that plan, with many of those planned openings taking a backseat to getting product on shelves and expanding digital options for shoppers.
In early 2022, the grocer revealed plans to open 150 new stores by the end of the year. While the retailer was able to open and remodel 139 locations last year, it will open more than 120 stores this year — more new openings than any other grocer in the country. ALDI is now the third-largest grocer in the United States by store count, with a current total of 2,400-plus stores.
Aided by the SEG deal, ALDI has set its sights on establishing a dominant presence in the Sun Belt, a swath of the United States that has attracted scores of new residents since the pandemic.
Hart notes that the company will convert “a significant amount” of Winn-Dixie and Harveys stores to the ALDI format over the course of several years, with a meaningful amount continuing to operate under their respective banners.
Earlier this year ALDI, which has a direct-sourcing model, opened a regional headquarters and its 26th distribution center in Loxley, Ala., which will ultimately serve as many as 100 stores across the Gulf Coast. Historically, ALDI distribution centers have been designed to service 70 to 75 stores in a 150-to-200-mile radius.
ALDI’s Fresh Finds
The explanation for why shoppers find ALDI’s value proposition to be irresistible doesn’t actually start with prices, but with its stores.
Over the past few years, the company has remodeled more than 1,100 stores to be more modern and easier to shop, with curated, 90% private-brand assortments featuring expanded fresh food such as produce, seafood, dairy and plant-based items.
“Our new store design formula worked very well for us, and we don’t anticipate changing it dramatically,” observes Hart. “With that said, we’re always thinking about how we can make the shopping experience even better.”
Shoppers seem to love ALDI’s typically 12,000-square-foot stores because they’re faster to navigate, and many have modern touches, such as self-checkout and electronic shelf labels, and offer a limited assortment (1,650-1,800 products on shelf, depending on the season, compared with 40,000 at a traditional grocer) that’s just right. Consumers can build a fancy charcuterie board or grill a Black Angus ribeye if they shop at ALDI, all while saving time and 40% off on a basket of groceries, compared with a traditional grocer. Shoppers feeling pained by the cost-of-living crisis are also making fewer trips to stores, shopping more private label products and turning their backs on supermarkets in favor of ALDI’s everyday low prices.
According to Patton, fresh produce and fresh salmon are currently proving to be big sellers.
“Probably our largest category in the store with the most growth, sales and loyalty from a customer standpoint is produce,” he says, adding that it has potential for even more growth. “We’ve also had tremendous success in fresh fish, which we weren’t even in six years ago. Our fresh Atlantic salmon is one of the highest-selling SKUs in the store. It’s fresh, never frozen. It’s shipped in daily for us, and has been a really exciting and pleasing area for us to be in.”
In the rest of the store, Patton is seeing growth in premium items.
“Maybe that’s counter-intuitive to the economic times,” he notes, adding: “I think people still want premium products. They want to shop them at ALDI. They want to make their charcuterie board; they want to make their dinner they saw on TikTok at home.”
Patton says that the company’s research shows that “people are responding to the simplicity of what we do, of great products at great prices, and how easy it is to shop.
“You know, we’re proud to not have a membership program,” he continues. “We’re proud to not have coupons and sales and points systems and all of those things. For the ALDI shopper, I think our great products, great prices, simplicity, good quality and on-trend products make us a competitive grocer. That’s really what the brand is all about.”
The discounter also offers rotating seasonal items and flavors, and its popular treasure-hunt program, ALDI Finds. These limited-time specialty items range from unique foods to home goods and other unexpected items like workout equipment, furniture or décor.
“We’ve actually expanded our seasonal program,” says Patton. “What we’re recognizing is customers really respond to that in our stores. In the summer, more grilling meats; in the winter, more roasts or pies; in the summer, more novelty ice creams and frozen dessert. I think that expansion of the seasonal range has really been one of the keys over the last couple of years to customers coming to us more during the key holidays.”
Lean and Green
As ALDI continues its rapid expansion across the United States, the retailer remains committed to becoming a leaner and greener company.
“Efficiency is what we do best,” asserts Hart. “Through improved ordering systems, enhanced forecasting and supply chain capabilities, and international sourcing, we’re able to operate in a nimble way without raising prices or compromising on quality.”
Hart attributes ALDI’s operational excellence to its global supplier network.
“We’ve partnered with many of these suppliers for more than 30 years, who, like us, work hard to provide quality items at the lowest possible prices and share our vision to do so responsibly,” he notes. “With our global scale, we can create efficiencies to source customer favorites like our exclusive chocolate brand, Moser Roth, directly from Europe, offering customers quality world-class chocolate for less. Through our global network, we can more easily track trends, sales and competitive moves so shoppers get the very best products at the low prices they love.”
According to Hart, this network also allows the company to react faster to emerging trends and get to market more quickly than competitors.
Of course, sustainability is a driving force at ALDI, and many of the decisions the retailer makes are good for the planet and for the bottom line. The company has installed rooftop solar panels on nearly 200 stores and 14 distribution centers and counting, to help offset energy costs.
[Read more: "10 Most Sustainable Grocers"]
Last year, ALDI released its first-ever “Corporate Responsibility Progress Report,” which outlined progress toward its community, environmental and other ESG goals. ALDI is the first major U.S. retailer to ban plastic bags, and the company is also working to reduce its use of plastic and increase the recyclability of its packaging.
The other part of ALDI’s corporate sustainability push is focused on community, starting first and foremost with taking care of its employees.
“We keep our engaged, loyal employee base by creating a workplace rooted in kindness, recognition and work-life balance, and investing in the development of our people,” says Atty McGrath, president at ALDI.
According to McGrath, ALDI gives its employees real decision-making authority and the ability to make a difference in the fast-growing organization. This year, ALDI rolled out new offerings for employees, including parental and caregiver leave, earned wage access, employee assistance programs for mental and physical well-being, and scheduling optimization solutions.
According to Jason Hart, no matter how much the expectations of employees — and customers — change, ALDI is “committed to changing with them.”
He says: “To me, growth is so much more than the number of stores we operate. It’s about continuing to earn the business and trust of more and more customers in all the communities we serve.”
