Disruptors: Aldi means business
Editor's note: Disruption isn’t a bad thing. It can be positive — causing retail grocers to get out of their comfort zones. Disruption, even when there’s upheaval, can force retailers to go back to the drawing board to implement new strategies to preserve their businesses. Disruption is challenging, but to discount it is to put your proverbial head in the sand. In the next several weeks, Store Brands identifies five current disruptors impacting private brands. Part three of the series.
Lidl was supposed to be a major industry disruptor when the Germany-based deep discounter opened its first stores in the U.S. last June. But Lidl’s landing may have provoked its German counterpart, Aldi, to disrupt even more.
There’s no doubt that Lidl has disrupted in the areas where it has opened its nearly 50 stores, especially when it comes to pricing. But Lidl has experienced some growing pains and its growth has slowed.
But Batavia, Ill.-based Aldi is another story. Owned by German retailer Aldi South, the chain “coincidentally” announced the week of Lidl’s initial store openings that it would invest $3.4 billion to expand from 1,600 to 2,500 stores nationwide by the end of 2022. Clearly, Aldi didn’t want Lidl to get all the attention, which says a lot about the fierce competition going on in grocery these days.
And Aldi seems to be in sheer attack mode. Months before announcing the expansion, Aldi announced a $1.6 billion program to remodel 1,300 stores by 2020. And then there’s the tenacity and confidence that Aldi displays. In the press release announcing the expansion, CEO Jason Hart said, “We pioneered a grocery model built around value, convenience, quality and selection and now ALDI is one of America’s favorite and fastest-growing retailers. We’re growing at a time when other retailers are struggling.”
By 2022, if all goes well, Aldi will become the nation’s third-largest grocery retailer behind Walmart and Kroger, and will serve 100 million customers per month.
“Aldi has been in the U.S. for more than 40 years and was already starting to make changes, but Lidl’s launch provided the additional impetus to radically reinvent,” says Nicole Peranick, Daymon’s director of global thought leadership/culinary, in Daymon’s recent “Private Brand Intelligence Report 2018.” “In turn, Aldi has made a very aggressive investment and is capitalizing on the momentum it already has by elevating the shopping experience.”
According to market researcher IRI, “Aldi’s focus on value and convenience, as well as its increasing emphasis on organic and healthier products, has enabled it to capture more share of wallet from millennial shoppers than any other shopper segment, making its entrance into new markets particularly formidable.”
IRI also reports that once a shopper buys at Aldi, customer satisfaction and repeat buying rates are high, with 80 percent of shoppers saying they are extremely or very satisfied with their experience, and 84 percent claiming they will definitely shop at Aldi again.
In March, Aldi unveiled the remodeling of 11 Cincinnati stores that cost more than $14 million. The new stores focus more on fresh items such as produce, dairy and bakery and also feature “Dietitian’s Picks,” an array of healthy products handpicked by nutrition experts. Aldi is clearly rolling with the changes, which call for retailers to differentiate by offering fresher and healthier products.
But it’s more than that. Aldi, which offers a 90 percent assortment of private brands, has improved the selection and quality of its products but has kept prices low. Its smaller stores are also much easier to navigate, a plus for convenience. In short, Aldi is offering tremendous value.
In some ways, it feels like Aldi is just getting started, even though it has been in the U.S. since 1976. Anchored by its private brands, Aldi will continue to disrupt for the next several years … and after that.
Mason Jar Cookie Company can help retailers differentiate through product, packaging
The Mason Jar Cookie Company is helping retailers to differentiate, which is what private brands is all about these days.
The Wellington, Fla-based artisan baking mix company offers hand-packed mixes of cookies, brownies, pancakes, scones and other products in iconic Mason jars. Each jar is layered with all the dry ingredients exactly measured. The company also offers its products in patented jar-shaped plastic pouches, giving the retro look of a vintage Mason jar. Both glass and pouch packages command attention.
“Retailers come to us to differentiate what’s already on the shelf and look to us for the visual difference we make in both glass and pouch,” says Bruce Renick, president of the company. “Our product is artisanal in its manufacturing. With the more than 200,000 custom flavors that we offer, we can help retailers customize their own products to differentiate. We are the most visually exciting product in the category.”
Renick notes that the Mason jar is a symbol of Americana, and wholesomeness is the best branding vehicle the company could have chosen to layer its baking mixes.