Aldi became one of the world’s biggest food retailers using a simple formula of no-frills stores offering a small assortment of products at rock-bottom prices. After decades of expansion in Europe, it followed the same strategy in the U.S., where it gets about $8 billion in annual sales and is growing from 15 percent to 20 percent a year, estimates Jim Hertel, managing partner at food-retail consultant Willard Bishop. Now the low-end discounter is working to also make itself more attractive to a different consumer: the type that shops at Trader Joe’s.
Both supermarket chains are controlled by different factions of Germany’s billionaire Albrecht clan, but there’s more than just a family rivalry at play. Aldi U.S. Chief Executive Officer Jason Hart has seen American shoppers become more concerned about the content and quality of the foods they eat. So his chain recently added organic quinoa and coconut oil, chia seeds, and grass-fed beef. It’s also testing cage-free eggs and sriracha sauce to pull Americans from not only traditional supermarkets, but also specialty chains. Aldi’s own SimplyNature all-natural and organic line has become its fastest-growing brand. Says Hart: “This isn’t your grandmother’s Aldi. … We’re attracting more consumers.”
The grocer, with 1,400 U.S. locations, is set to compete fork-to-fork against established West Coast foodie favorites such as Trader Joe’s and Sprouts Farmers Market. Next year, Aldi will enter California, and it plans to reach 2,000 locations nationwide by the end of 2018.
Aldi’s reputation as a low-end retailer has changed since the recession, says Hertel. “People got forced into it and realized that it was good quality food and great value,” he says. “The perception started to change.”
The secretive company was founded more than a century ago when Anna Albrecht opened a small store in Essen, Germany. In 1948 her sons, Karl and Theo, took over and expanded to 30 locations in seven years. The name was shortened from Albrecht Discount to Aldi in 1962, the year the Albrecht brothers split the chain into separate companies—Aldi Süd and Aldi Nord—following a feud over whether to sell cigarettes.
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