Recently, Supermarket News awarded Aldi USA with the 2015 Retail Achievement Award. This prize was awarded to honor Aldi’s exceptional achievement: Aldi USA has not only been able to increase its sales significantly, it has also served as an example for American retail.
I can only smirk at the title of my own entry. It’s actually not something that I came up with, but something from the American trade press. I’m smirking, because Aldi in the USA isn’t any different from Aldi in Germany: the stores look the same, aren’t any bigger than they are in Germany, and they offer a lot of basic groceries, a small selection of fruits and vegetables, and have an aisle with special offers. It doesn’t exactly sound exciting!
How is Aldi “Made in the USA”?
What Aldi has done, is to adapt its range of products. There is a large variety of cereals and chips in the grocery section, but I haven’t seen any flour or sugar. The refrigerated section has room for a palette of milk, which is a dollar cheaper at Aldi than at Walmart. One gallon costs $3.52 at Walmart, whereas Aldi sells it for just $2.59. You won’t find any asparagus in the produce section, but there are plenty of cooking plantains and lots of corn. Lastly, I’ve never seen clothing for sale in the special offers aisle, which may be due to the fact that clothing is less expensive in the US than in Germany.
Aldi USA isn’t as Camera shy as in Germany
One event to highlight is the interview with Jason Hart, CEO of the US daughter company. Aldi is known for being media shy. In my more than 20 years in Germany, I can’t remember a single interview. Just shortly before his death in 2014, the last surviving founder of Aldi, Karl Albrecht, finally granted the Frankfurter Allgemeinen Zeitung a glimpse into his world. This made me all the more surprised to read a lengthy article with plentiful quotes from the American manager.
According to Supermarket News (the German equivalent is Lebensmittel Zeitung), Aldi has re-invented the American discount market, even though it generates lower volumes. Aldi presents a real threat for Walmart.
“Over the last 15 years, Aldi has gone from attracting that income-constrained customer who needed to shop for the lowest-price groceries, and evolved so that stores are more pleasant, more open and brighter. They’ve evolved merchandise assortments to be more trend-right. And that’s widened the customer base from people who need to save money, to more of a smart shopper who wants to save money”.
One Point of Criticism: Service
When I posted my first blog post about Aldi to Twitter, I ended up spending a few days exchanging tweets with an American, who was decidedly not a fan of Aldi. Her main point of criticism probably rings true for many Americans: the lack of service. Not everyone is happy with having to have a quarter at the ready to access the shopping carts. Many don’t care for the smaller selection of goods. Others dislike being checked out at the register at lightning fast speeds. Aldi can’t be everything for everyone, but even so, it’s gaining more and more customers in the US.
German Discipline, Even in the USA
In Supermarket News, Hart revealed the recipe for Aldi’s success in the USA: DISCIPLINE! Discipline in staying true to the policy of offering the lowest price, high quality, and simple presentation and discipline in selecting products. By discipline, Hart means sticking to a concept and maintaining uniqueness. In contrast to the traditional American discount stores, Aldi has always maintained this: a core selection with tidy shelves and no products with expired sell-by dates.
Aldi has developed further in the last 40 years that it’s existed in the US. The stores have become friendlier and Aldi USA now offers more fruits and vegetables than before. Even organic products have found their ways onto Aldi’s shelves. Next to the organic products, Aldi also stocks gluten-free varieties, premium products (e.g. Soppressata, a type of Italian sausage), and natural products without additives. Additionally, there are non-food items, called “Special Buys”. This should all sound familiar to Germans, since there is really no difference from the German markets.
One Should Not Speak of Numbers
One thing that’s not at all any different from Aldi in Germany and that is the silence surrounding solid numbers. Hart has only shared some information, for example, that the new stores are about 10% larger (up to 11,000 square feet.) and so have more room for more articles. Currently, an Aldi store carries an average of 1,350 SKUs.
The following numbers are estimates from Supermarket News. The average Aldi store brings in $150,000 a week, with an average purchase by customers around $53. To compare, Aldi Süd has 1,850 stores and generated € 15.5 billion in 2014, which comes to about €160,000 a week. This morning, the exchange rate was about $1.12 to €1. With the exchange rate in mind, average sales were about 20% higher in Germany than in the USA.
Oktoberfest at Aldi
I’ve reported several times on Aldi and Lidl in the US. Two years after moving to the US, I still go shopping at Aldi on occasion. After being away for six months, I went there last Friday and filled my shopping cart with all sorts of German cuisine products: Weisswurst (a Bavarian sausage), Nürnberger (thin and short sausages from the Nürnberg region), Spätzle (egg noodles), Erdnuss Flips (essentially peanut-flavored Cheetos), and Jaffa cakes. Aldi was advertising Oktoberfest Week. There wasn’t any beer, but there were giant hard pretzels and sweet mustard. Near the German Bundeswehr campus in Reston, Virginia, they are apparently already sold out through Thursday evening. Prosit, Aldi!