Aldi has taken the retail industry by storm, making the shopping experience better for customers and taking market share from other established grocery chains. The discount supermarket does not have as many products as a traditional grocery store, but it has enough of a selection to attract shoppers looking for a bargain. As a result, Forbes is calling Aldi a "growing menace" to established companies in the consumer packaged goods industry.
There is no shortage of product options at most traditional grocery stores. Some shoppers prefer a lot of variety, but others want to grab a few items and get out of the store. Aldi makes shopping easier for customers who don't want to spend a lot of time comparing products. The discount supermarket only stocks one brand of each item, eliminating the need to compare prices, package sizes or product features. Each grocery store in the Aldi chain is also rather small, making it easier for customers to move through the store and complete their purchases.
Aldi is able to offer lower prices than other stores because it does not have all the bells and whistles of a traditional grocery store. The only way to get a shopping cart is to put a quarter in the cart rack. When customers return their carts to the rack, they get their quarters back. This tactic eliminates the need to hire employees to retrieve carts from the parking lot. Aldi doesn't have an employee working in every department. Instead, each grocery store has a few employees who perform several functions. Cashiers are also responsible for stocking shelves and sweeping the floors. This eliminates the need to pay extra employees, allowing Aldi to offer reduced prices on its products.
Aldi simplifies the shopping experience by eliminating sales, BOGO offers, merchandising tricks and promotional gimmicks. There are no product demonstrators offering free samples or handing out coupons for new products. Customers aren't asked to join a loyalty program or sign up for a membership card. Some people are still hesitant to shop at Aldi because it is a discount grocery store. Like other discount chains, Aldi needs to get the word out that it has products comparable to those made by trusted manufacturers.
Although the grocery chain is growing, approximately 25 percent of American consumers still don't have access to an Aldi store. As a result, executives at traditional grocery chains need to watch Aldi carefully. The company is well-positioned to continue its expansion and grab some of the market share currently held by big-name grocers.
Until now, executives in the grocery industry have largely ignored Aldi's presence. Because the chain does such a good job attracting new shoppers, industry executives can no longer afford to overlook the discount grocery store.
Photo courtesy of Mike Mozart at Flickr.com