Food price escalation won’t change Aldi’s formula, CEO Jason Hart says

Following news of historical U.S. food price increases, Aldi U.S. CEO Jason Hart has pledged to hold the line on savings for shoppers.

In a letter to Aldi customers yesterday, Hart said the hard-discount supermarket chain won’t veer from its focus on providing everyday low prices for groceries, despite industrywide supply-chain challenges amid the coronavirus pandemic.

“It seems as though, in the blink of an eye, everything has changed. While just about every aspect of our lives might look a little different now, including grocery shopping, I want to assure you that one thing will never change at Aldi: our commitment to offering you the lowest prices, every day,” Hart stated in the letter. “We know you love Aldi for our great prices, and those prices aren’t going anywhere, no matter what.”

Last week, the U.S. Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) for food edged up 1.5% month-to-month for April, compared with a 0.3% uptick in March, and was up 3.5% year over year. Larger increases came in the food-at-home CPI, which rose 2.6% month-to-month in April — the largest monthly uptick since February 1974. The gain was 0.5% in March. Year over year, food-at-home pricing climbed 4.1% for April.

“Access to affordable groceries is more important now than ever before. Our promise to you is that Aldi will continue to offer the lowest possible price every time you shop for groceries,” Hart said. “Regardless of how the market shifts, you can trust we will do everything in our power to continue to offer you unbeatable value,” he added.

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“We know you love Aldi for our great prices, and those prices aren’t going anywhere, no matter what,

For food-at-home, all six major grocery food group price indexes climbed year over year in April, BLS reported. Price hikes ranged from 0.4% for fruit and vegetables to 6.8% for meat, poultry, fish and eggs. At the upper end of the increases were dairy, up 5.2% versus a year ago, and nonalcoholic beverages, up 5%.

Market researcher Nielsen also has been tracking recent price escalation in consumer packaged goods. For the week ended May 9, the average unit price for total in-store CPG rose 6.1% versus a year ago, including sizable increases for fresh meat ( 12.3%), fresh meat alternatives ( 25.2%) and eggs ( 26.1%). Through the previous week, ending May 2, 78% of store categories had seen price inflation in the prior five weeks, according to Nielsen.

Batavia, Ill.-based Aldi U.S. stands well-positioned as the COVID-19 crisis heightens consumers’ financial and health concerns. The retailer offers a curated selection of high-quality private-label products — about 90% of its mix — with everyday low prices and a simplified shopping experience that enables customers to get in and out of the store quickly.

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In its April COVID-19 Commerce Snapshot, which polled 2,000 U.S. consumers, Kantar found that 34% expect to try a new retailer to get the products they want and to adjust their shopping budget. Of those shoppers, 12% cited Aldi as a new retailer they plan to shop. And Aldi’s focus on private brands also bodes well for the chain: For the 10 weeks through May 9, private-label in-store CPG sales are up 27.1%, Nielsen reported.

Aldi says its retail model, along with fast inventory turns and extremely efficient store operations, helps the company keep its prices down.

“We are proud to be leading the industry with some of the best, most innovative suppliers,” Hart said in the letter. “These relationships, along with our simple and efficient approach to grocery retailing enable us to pass measurable savings along to you, day after day.”

Overall, Germany-based Aldi operates 1,977 U.S. stores in 36 states. The company is more than halfway through a five-year, $5.3 billion expansion plan that by the end of 2022 will broaden its retail base to 2,500 stores and upgrade most of its existing locations.

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