ALDI fans know it's the place to go for affordable groceries, from fresh meats to dried fruit to wine and beer. It turns out the German grocery chain's low prices are a part of a very clear strategy to provide low-cost, high-quality groceries, at a cost even more affordable than Walmart.
CEO Jason Hart recently spoke about the strategy to Reuters, outlining the changes the brand is making as it continues to expand across the U.S. The main strategy involves offering more private-label goods, or in-house brands (like those cookies that look just like Oreos but cost less). Because these products are made specifically for the retailer, they cost less to stock and don't need to be marketed.
ALDI is also investing $1.6 billion in remodeling nearly all of their stores between 2017 and 2020, with 1,300 of the 1,600 current stores undergoing renovations, Consumerist reports. Changes to the stores will make them more aesthetically pleasing, with sleeker fridge doors and more natural light coming in, and are meant to draw customers who are used to shopping at places like Trader Joe's and Whole Foods (basically, ALDI wants everyone). Beyond the cosmetic improvements, ALDI is also modifying the products themselves, removing added MSG, certified synthetic colors and partially hydrogenated oils from all ALDI-brand foods.
If there's not currently an ALDI near you, you may be able to get in on the deals soon — the brand is opening 400 more stores by 2018, largely in Florida, Texas, and on both coasts. This is part of ALDI's effort to grow their market share, of which it currently has 1.5 percent, compared to Walmart's 22 percent, according to Reuters. For comparison, as of January 2017, Walmart had 5,332 retail locations in the U.S. to ALDI's 1,600.
According to Reuters reports, in the states ALDI operates in (which are largely in the South, Northeast, and Midwest), it does currently have the lowest prices in private label consumer products, beating out Walmart in price comparisons for a grocery basket of 15 items. Hart expounds on this claim, saying the company's internal studies indicate prices are 21% lower than low-priced rivals.
In response, Walmart has launched price tests in 11 states with both stores in an effort to keep prices competitive. Meanwhile, as the two grocery stores duke it out, we'll continue to enjoy the lower prices all around, and these summer-friendly alcoholic ice pops.
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