'Smalldi' Makes Its London Debut

Although it’s only a test, and an ocean away, a new compact interpretation of the Aldi discount store near London is illustrating a potential new growth frontier.

The new store, dubbed Aldi Local, is about 6,400 square feet—or about half the size of the discounter’s typical models in the United Kingdom. Aldi’s stores there are operated by the same Aldi Sud division responsible for its stores in the U.S.

Aldi Local opened this week on a main shopping street in Balham, a wealthy South London neighborhood. According to a report by TCC Global, the store carries about 400 fewer items than its full-line counterparts (about 1,500 SKUs vs. 1,900) with an assortment geared toward items that can be carried out on foot. Notable for its absence is the “treasure-hunt” general merchandise aisle of traditional Aldi stores.

Analyst Bryan Roberts, writing in TCC Global, remarked, “At 6,400 square feet, the store is not tiny and indeed feels pretty spacious: with tons of signage and graphics, it is a pleasure to navigate and shop. There is a nod towards different missions with a food-to-go chiller and ready meals positioned at the front of the store, but the main tweaks seem to be a focus on smaller pack sizes and formats and the exclusion of general merchandise, meaning that Balham shoppers with their hearts set on angle grinders, fishing rods and giant ceramic frogs will need to look elsewhere.”

Photograph courtesy of TCC Global

A spokesperson reportedly said the concept was being tested at Balham, so it could be time before Aldi Local is expanded in the U.K., much less internationally. But exporting European concepts is essentially what discounters such as Aldi and Lidl do.

Aldi is in the middle of a $5 billion U.S. expansion and remodeling plan in which its stores are growing in size rather than shrinking. However the vast majority of its fleet—which will number 2,500 U.S. stores by 2022—are located in suburban locations serving automobile traffic.

Some U.S. retailers, including discounter Dollar General and supermarket operator Ahold Delhaize, are looking to find new ways of penetrating urban environments that younger consumers favor, typically with a smaller take on their traditional stores.