Aldi Working To Strengthen Supplier Relationships
“The days of boring private label are behind us.”
That was the simple, straightforward sentiment offered by Dave Rinaldo, president of Aldi, during his keynote presentation at the 2024 PLMA Private Label Trade Show in Chicago.
Speaking to an audience of some 1,500 industry professionals at the Hyatt Regency O’Hare’s Grand Ballroom, Rinaldo’s remarks were focused on the need for the grocer and product suppliers to strengthen their relationships, a topic of greater importance as Aldi plans on adding 800 stores by 2028.
As previously reported by Store Brands, the combination of organic store growth and its acquisition of Southeastern Grocers is seeing the Aldi banner expand in numerous states across the country. The growth is in existing and new markets for the grocer, with the most notable being its coming entrance to the Las Vegas market.
“In America, we’re growing right now in every single demographic as 25% of all households and 25% of all Americans shop Aldi,” he said. “That’s double the rate of just six years ago. If you told me 10 years ago that 25% of Americans are shopping Aldi, I would have told you you’re crazy.”
Rinaldo noted its fastest growth has come from high-income customers living in affluent areas of suburbs across the U.S.
As its customer base grows, so too is its store count. While the expansion has grabbed the headlines this year, the additional stores will need to be filled with products. And making sure those shelves are full is something that remains top of mind for Rinaldo.
“The single thing I’m concerned about in our ability to pull this off is supply capacity,” he said. “Our single greatest risk is that we don't have the supply partners that will be able to grow with us at the rate that we need to and we’re not able to get enough new supply partners.”
With a focus on keeping store shelves filled as it expands, Aldi has gone to school on anonymous feedback it received from the supplier community on what steps it can take to further strengthen is vendor relationships. The big takeaway from suppliers was a need for Aldi to sharpen its forecasting that would allow for more joint ventures and long-term arrangements.
“What we’re trying to recognize is that (suppliers) need LTAs, and they are important when we’re talking about the need for investing in automation or new facilities,” he said. “We’re really evolving how we are working with our suppliers.”
As Aldi works to sharpen its forecasting, Rinaldo noted there are several aspect of doing business with the grocer that the supplier community needs to keep top of mind.
Perhaps the most obvious is providing quality products. The Aldi president said manufacturers should not sacrifice product quality to juice up margins or hit a certain pricepoint.
“Quality is so fundamental to what we do and we can’t lose sight of that,” he said. “As a collective, we need to make that the most important thing is to always have the highest quality private label offerings that are also innovative.”
While maintaining product quality, Rinaldo said there is a need to fight costs at “every single turn.”
“You need to work to lower your operating costs and we need to work to lower product cost,” he said. “Retailers need to take that savings and they need to invest it. When we drive that value gap to the greatest extent possible, you win, we win and the customer wins.”
