Aldi’s humble beginnings

“Aldi is generally considered the true low-price leader in the United States,” said Steve Grinstead, founder of The Grinstead Group in Plano, TX.

“The minimal amount of labor to run the stores is amazing, and they carry higher-quality products than some discount grocers. Aldi is a good option for consumers who are looking for a quick shopping experience, a limited selection, and good quality private label products at a low price.”

“The negative,” Grinstead continues, “is that Aldi is attractive to a fairly narrow niche. Most millennials today are interested in a shopping experience if they’re not buying online, and shopping at Aldi doesn’t provide much of an experience. The stores are mostly small and tight.”

During and after the recession that began in 2008, many consumers of all income levels tried Aldi BB #:116756 for the first time, attracted by its prices, and stayed.

But while Aldi has appeared on the radar of both consumers and competitors in a big way over the last 10 years, the company has been in this market for more than 40 years—since 1976, when the first U.S. store opened in Iowa.

“They’re a 40-plus-year overnight success,” joked Jim Hertel, senior vice president at Inmar Analytics in Winston-Salem, NC.

And when it comes to Aldi’s shoppers, he said many began shopping at the stores out of necessity but stayed because they liked it.

Sweet corn supplier Twin Garden Sales, Inc. BB #:119080 of Harvard, IL, has been working with Aldi for more than 30 years.

“Over time I’ve seen them grow from almost nothing to a powerhouse,” said Mark Hayes, president at Twin Garden.

He said he’s noticed Aldi has not only become more sophisticated, but the company, which was “always lean and mean, is now lean, mean, and smarter.”

In Aldi’s early years in the United States, it was known for rock bottom pricing, but observers say its merchandising techniques, store environment, and quality left something to be desired.

In the produce section, for example, there was no refrigeration, which resulted in less than appealing fruit. “I think most people probably bought dry goods there and went to Jewel or Walmart for produce,” Hayes said.

“In the past, Aldi has been accused of being too slow to react to competitive and consumer changes, due to an inward focus,” said Simon Johnstone, director of retail insights at Kantar Consulting, Boston, MA.

“Aldi Süd restructured its management teams to drive greater growth in its three fastest-growing markets: United Kingdom, United States, and Australia. As a result, the United States has seen more investment—and to some extent, innovation—than other Aldi markets.”

This is an excerpt from the most recent Produce Blueprints quarterly journal. Click here to read the full version.