ESSEN, NORTH RHINE-WESTPHALIA - It's a common refrain that grocery is among the most competitive markets in the U.S. economy, yet it is within this high pressure industry that Aldi thrives.
“The Aldi model, which they've really perfected over almost 30 years in this country, is really knocking it out of the ballpark,” Jim Hertel, Managing Partner at Willard Bishop shared.
What is the Aldi model? Aldi's approach to the retail game is a two pronged attack on price-point and frills in a concerted effort to deliver the highest quality goods to consumers at the lowest possible price, even if doing so requires the abandonment of many of the bells and whistles one might find at a traditional retailer.
Andrew Wolf, Senior Equity Research Analyst at BB&T Capital Markets commented that Aldi's focus on simple efficiency, something for it was recently named the world's "Most Simple" brand, allowed it to take full advantage of the opportunities presented during the Great Recession of recent years.
“Aldi used the recession,” he explained. “They generated a lot of trials, a lot of people tried the format and found out that it was great to save 40%, and, in fact, the products they were buying were as good, or in some cases better than, the products they were buying in the store. When they got their jobs back or things seemed to get on more solid footing, the question was: 'Why would I go back to paying 40% more?'”
This experience helped entrench Aldi's model into the middle class market, a shift which has generated impressive returns for store growth and sales numbers.
“What's really challenging about Aldi is that it's really more a middle class than a lower third type of concept,” Andrew shared. “I think they see that this is really in the sweet spot of value right now.”
Today, Aldi is among the biggest players in the retail market. AndNowUKnow previously covered its plans for store growth, which include doubling its store base in the UK by 2021 and opening 650 new stores in California between 2013 and 2019.
Congratulations on a terrific performance over the last several years, Aldi!
