How retailers can prepare for Aldi’s expansion

Aldi, the German limited discounter, has ambitious expansion plans—the retailer expects to add more than 900 stores in the U.S. for a total of 2,500 by 2022. A new study by market research firm IRI is helping retailers and manufacturers understand what to expect and how to prepare for the Aldi expansion.

In the next few years, Aldi could become the third largest grocery store by count, according to the Market Shift Study. The study, which included 700 consumers who had shopped at Aldi, left researchers with highly satisfied shoppers, said Fernando Salido, EVP of shopper analytics consumer and shopper marketing solutions at IRI. Eighty percent of shoppers were extremely or very satisfied with their experience, and 84% said they’d be back and intended to switch more of their shopping to ALDI.

“They’re quite a force,” said Salido.

Customers surveyed told IRI things like: “I trust the quality of the products they sell, and they are usually cheaper than other stores,” and, “The prices brought me, and I found things I liked and stock up on those things when go.”

Clearly, value was important for these consumers.

Aldi’s recent expansion is part of the appeal to customers, too. Forty percent of first-time shoppers surveyed said they wanted to experience a new store.

Retailers are reacting to Aldi by lowering prices when the discounter opens nearby, Salido said. He also suggests targeting the areas where customers are dissatisfied with Aldi. The IRI study found that customers disliked the long checkout lines, limited product variety, low product stock, and the quality and freshness of the fresh goods. These complaints were minimal, however, added Salido.

Recently, Aldi has taken steps to modernize its stores, add more selection and more fresh products, such as an in-store bakery in an Illinois store. 

In order for retailers to compete, they need to position themselves as offering great value and as a one-stop shop with the variety and assortment Aldi doesn’t offer, said Salido. Traditional retailers can also compete with Aldi on convenience, he said. Short lines and self-checkout services can draw people in. Traditional retailers also offer familiar domestic brands, which may appeal to some customers. Aldi, on the other hand, sells mostly private labels or foreign brands.

Club stores may soon face competition from Aldi, too, said Salido. On a recent visit, he saw a customer with two carts, one for work and one loaded with cartons of milk to supply the customer’s coffee shop, he said: “What would have been a natural club purchase, where you buy and bulk and are supposed to get that great deal, she was instead buying at Aldi.” 

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