It’s not only in the USA that Aldi vs. Lidl is a hot topic – and in the 02/2016 edition of German magazine “Wirtschaftswoche”, Aldi showed why. The business news publication featured an extensive report on Aldi’s billion-dollar plan to thwart arch-rival Lidl. As Aldi prepares to open its first stores in California, a radical transformation looms: more branded goods, better service and more modern shop floors.
For years, Lidl was little more than an Aldi clone – a smaller competitor nipping at its heels. In recent years, however, it has freed itself from that role: thanks to an aggressive expansion within Europe, the German supermarket chain can now almost claim to match Aldi’s global turnover. Aldi couldn’t stand by and watch any longer – which is why both Aldi Nord and Aldi Süd are now fighting back. Wirtschaftswoche drew comparisons with Star Wars: “Das Aldi-Imperium schlägt zurück” (The Aldi Empire Strikes Back) or “Store Wars: Aldi enters the battle with more brands, new shops and billion-dollar investments.”
Does Wirtschaftswoche give any clues about what Aldi might be doing differently in California? In December 2013, the German press wrote about the company’s plan to expand with 650 new stores in the USA by 2018. Spring 2016 will see the first Aldi stores opened in California.
More Branded Products at Aldi
For a long time, Aldi’s philosophy was to provide small numbers of premium products at unbelievably cheap prices. Ask any German, and they’ll tell you that Aldi offers the best quality at the lowest prices. The American Aldi slogan, “Top Quality at Low Prices”, doesn’t exactly represent anything new.
Now, Aldi has expanded its range of brands in Germany. Three years ago, it was Coca-Cola; next came branded beer (Krombacher), Lenor and o.b. tampons. Today, customers can purchase German Nesquick, TicTac and Nivea at Aldi. In the Wirtschaftswoche article, a former Aldi manager described the change of strategy as follows: “Aldi is trying to identify the iconic brands for which customers will actually seek out a store – or leave it again when a product is out of stock.”
The GfK, a leading German market research organization, have reported how the price of a branded product sinks by an average of 17% once it is listed at Aldi. Wirtschaftswoche reported in detail on how Red Bull is now sold off at Lidl or Aldi. But for these discount stores, it’s worth it anyway: they earn enough on their own brands to forego the usual margins on branded products.
Enhanced Service for Aldi Customers
The first I tweeted about Aldi, I found myself embroiled in a several-day exchange with an American Aldi-hater. Her criticism was one that many Americans will no doubt share: the lack of service. Not everyone likes paying a quarter ($0.25) for the privilege of using a shopping cart. Many bemoan the lack of variety in the product range. Others don’t like being dealt with so briskly at the checkout.
– Longer opening times – until 21:00, sometimes until 22:00
German customers can look forward to longer opening times in around 700 stores. There are similar signs of adaptation in the USA: Aldi branches in the Greater Washington area now open on Sundays. That wasn’t the case with my local Aldi store when I moved here in 2013.
– Wooden bench in front of the door for weary customers
A wooden bench doesn’t require much maintenance and doesn’t cost a lot. Who knows – maybe it’s worth a try in California too?
– Coffee machine
Hmmm, Americans and coffee… Yes, that could work. Admittedly, it’s American-style coffee – a half-liter cup, a little caffeine and plenty of milk –but if the product is right for the market, then why not? I doubt, however, that the idea would work in Germany: too much involvement for the staff.
– Toilets at Aldi!
“In the coming months, all newly built Aldi-Süd branches will offer a customer toilet with nappy-changing area.” Will this also apply for the Californian stores opening in early 2016?
– Recipe Dispensers
In the east of Munich, Aldi has established a test store for trying out new concepts. One such concept is a recipe dispenser that prints lists of ingredients, all of which – naturally – are available in-store. I’d be willing to be that this won’t be introduced in California – the Americans aren’t such big fans of cooking.
More competition for Aldi in the USA?
In my post of 29.12.2015, I reported extensively on the recycling of ad spots in Aldi’s English-speaking empire or on the use of new of media.
Now, all that remains is to wait and to pay a visit to Aldi in Los Angeles or San Diego. Time will tell whether they truly manage to transform themselves into the “Luxury Aldis” that Wirtschaftswoche wrote about.