Shopping Centers Today International

JAN 2016

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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Aldi W ith the worldwide economic crisis came increased consumer demand for both value and quality. This was a daunting challenge for the grocery industry, but for Germany- based Aldi, it was a familiar operating model. The discount chain, known for no-frills pallet displays, highly rated private-label foods, and modest, 11,000-square-foot store sizes, was the right concept for the times. Custom- ers must bring their own bags (or buy reusable ones at the store), sack their own groceries and return the shopping carts to a rack to get a 25-cent deposit back. But they do not seem to mind. Much like Aldi-owned Trader Joe's, Aldi offers small, well-edited assort- ments (some 2,000 items, versus the 45,000 of a typical grocery chain) plus distinctive private-brand products, consistent pricing and quick check- out. "Aldi learned from Trader Joe's that it can curate its own products and do exceptionally well with them," said Phil Lempert, CEO, editor and colum- nist of SupermarketGuru.com. "Plus, Aldi's has a small, basic footprint and can open stores rapidly at far less ex- pense than competitors." The sky is the limit as far as U.S. growth is concerned. Aldi has plans to add 600 U.S. stores to its current 1,400 here by 2018, in part to coun- ter rival German discount grocery chain Lidl, which is coming to these shores too, says Lempert. Aldi's next U.S. stop is Southern California, where it aims to open about 50 stores starting this year. "I wouldn't be surprised if we eventually see 5,000 Aldis in the U.S.," Lempert said. One key Aldi marketing focus involves demonstrating to shop- pers, through blind taste tests, that Aldi brands are of equal quality to the national brands, or better. In the U.S., where Aldi has a foothold in 32 states, the chain appeals to the target Millennial population — whose members are typically un- deremployed and burdened with high levels of college-loan debt, says Lempert. "Aldi has been really smart about attracting them, and everybody else, for that matter," he said. The chain also ranks high in corporate responsibility — paying its top associ- ates up to $75,000 a year and having recently announced that it has quit using synthetic colors, partially hy- drogenated oils and added MSG in its self-branded offerings, which com- prise about 95 percent of selection. Founded by Anna Albrecht in 1914 in the German industrial city of Essen, Aldi has grown rapidly from 6,000 stores worldwide 10 years ago to its current 10,000. Aldi has some 4,300 stores at home in Germany, ac- counting for roughly two-thirds of its total sales there. The company plans to roll out 130 stores in the U.K. over the next six years, plus 80 more in Australia in a time frame shorter than that. Italy is Aldi's next major expan- sion target. Industry trade magazines and analysts cannot dole out enough ac- colades to the grocer, so it seems. BB&T capital markets analyst An- drew Wolf describes Aldi as "a dollar store for food." 30 S C T / J a n u a r y 2 0 1 6 P h o t o : J a s o n a l d e n / B l o o m B e r g v i a g e t t y i m a g e s

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