USA: Aldi’s Next Phase

Discount Retail Chain Aldi U.S. (family owned) has added more than 200 stores in the last 2 years, with another 100 on the way this year, and has set a goal to hit 2,500 stores by the end of next year. Then, we can talk about its remarkable online activities.

Consider the fact that two years ago, the Batavia, Ill.-based discount retailer did not have curbside pickup and had just begun a delivery service with Instacart. It now has curbside pickup running at around half of its locations and delivery is available at nearly all of its stores. It was also the first retailer to accept EBT SNAP as a payment option through Instacart.

Obviously, the COVID-19 pandemic accelerated Aldi’s e-commerce expansion as it did across retail, but this digital embrace also is a key factor in what can be considered the next evolution of Aldi. “To add some context, in response to changing customer needs during the pandemic, we added roughly 1,000 curbside grocery pickup locations in a little more than a year,” said Brent Laubaugh, co-president of Aldi U.S., in an exclusive interview with Store Brands. “We’ve learned that now, more than ever, people want options for how they shop and we’re proud to be able to offer those choices. The demand for e-commerce continues to be strong, so it’s a critical part of our business that we’ll continue to invest in.” He added, “The last several years have been very transformative for Aldi. We’ve invested more than US$5 billion in a multi-year, nationwide growth initiative and have opened more than 500 stores in the last five years.” Grocery industry analyst Phil Lempert, better known as The Supermarket Guru, went one step further when asked about Aldi. He said executives told him that e-commerce and curbside pickup is enabling Aldi to attract shoppers that have never been to an Aldi. “They’re smart. They’re constantly evolving and trying to get new products there and new shoppers into the store,” he said.

The Rise of Aldi

Laubaugh credited the loyalty of its shoppers for the retailer’s rapid growth. “It’s their commitment and enthusiasm that continues to propel us forward,” he said, pointing out the “grass-roots enthusiasm” found on social media. It’s true, a search on Instagram brings up more than 50 influencers dedicated to the retailer with handles like All I Need is Aldi, Aldi for President, Aldi Nerd, Aldi All the Time and many more. The accounts share regional perspectives, such as The Aldi Nerd, based in Florida, who just posted about Aldi’s rain boots and Pineapple Mimosa product. All I Need is Aldi focused on recipes, cooking and product reviews from her area stores. Laubaugh said the influencers take to social media to highlight Aldi Finds, the weekly drops from the retailer, and personally noted the Facebook fan group Aldi Red Bag Chicken, which has nearly 20,000 followers solely dedicated to sharing recipes and photos of how home cooks innovate with the retailer’s Kirkwood Breaded Chicken Fillets. Aldi has even placed shelf tags near the product in stores proclaiming: “Red Bag Chicken. So Good It Has Its Own Fan Group.” Screenshot from Facebook “The sales for those already popular filets increased exponentially after we shared our own fast-food chicken sandwich dupe made from Aldi ingredients amid the chicken sandwich craze,” Laubaugh noted. “Their passion and buzz have helped make us one of the fastest-growing retailers in the country.”

How Aldi built such a rabid fan base started years ago as consumer perceptions changed and shopper demographics changed, Lempert said. Traditionally, 20 years ago, an Aldi shopper was considered someone only interested in saving money. “They weren’t upscale consumers,” he said. “The stigma that was attached to using coupons, or going to Aldi, or going to a dollar store was gone with Generation X, with millennials, where people didn’t feel that way anymore.” Diane Wehrle, marketing and insights director at Springboard, a global intelligence company, said Aldi filled a gap. “Aldi’s proposition of low-cost grocery retailing combined with stores that are smaller than traditional large grocery formats have delivered convenience to shoppers that was previously unavailable,” she said, adding that shoppers who are “time-poor” find the small format beneficial and that millennials seemingly have less desire for leading brands, paving a way for Aldi’s own brands. "The last several years have been very transformative for Aldi.

Aldi earned its new shoppers by curating to what they need, Lempert said. For example, the retailer will stock four olive oils, as opposed to dozens at some conventional grocers, he added. There will be an everyday olive oil, an extra virgin olive oil, an organic olive oil and one imported from a small town in Italy. This is the model that newer shoppers prefer, Lempert said, noting that it is in-step with the similar rise of Trader Joe’s. While Lempert said the two retailers don’t communicate with one another, “the two of them have changed the way conventional retailers look at store brands. They woke them up and said, ‘Hey, if we do a good job on our store brands, shoppers will buy them.’”

Aldi’s Ex