For produce suppliers, Aldi BB #:116756 represents a significant boost in sales.
“It’s a huge opportunity because as Aldi adds more stores in middle- and upper-income areas, these are the areas where produce consumption is increasing,” said Phil Lempert, the Santa Monica, CA-based Supermarket Guru and publisher of The Lempert Report. “Every produce supplier should be at Aldi’s door.”
“As Aldi grows it will continue to provide growth opportunities for produce suppliers,” said Steve Grinstead, founder of The Grinstead Group in Plano, TX. “The challenge is it didn’t get to be the low-price leader by accident; margins on products are razor thin.”
There have also been changes to Aldi’s procurement process.
Mark Hayes, president at Twin Garden Sales, Inc. of Harvard, IL, BB #:119080 said two years ago a centralized buying regimen was implemented, and while he believes this will be good for Aldi in the long run, it offers challenges for suppliers. “Centralized is less tolerant of problems.”
Aldi has also implemented an EDI program and national contract buying that favor year-round contract suppliers.
“You have to know your Ps and Qs to do that,” Hayes said. “It gets a little tricky to plan a whole year.”
The most critical challenge comes down to price. “We all want a better price,” Hayes said. “Costs keep going up and up, and we have a story to tell. We’re all trying to balance our bottom lines. In most cases, Aldi is at the very bottom of pricing. If it continues on this path, the better shippers may bow out.”
“Aldi is moving from limited-assortment to choice-with-purpose,” said Simon Johnstone, director of retail insights at Kantar Consulting, Boston, MA.
“This is where it is continually reassessing space allocation for key categories in stores, to better reflect where its strongest sales lie.” One indication is the expansion in produce and the department’s move from the back to the front of the store, he notes.
This is an excerpt from the most recent Produce Blueprints quarterly journal. Click here to read the full version.
https://apps.bluebookservices.com/BBOS/LearningCenter/BP/July%202019/eBook/index.html?page=15
