Grocery chain, Aldi, is upping the ante in the organic food space and now it is expanding the organic food brands, taking out artificial ingredients and adding gluten-free items with the goal of attracting health-conscious consumers. As you probably know, this niche is its biggest weakness and now that it has decided to step up its game, other companies like Whole Foods should be terrified.
Aldi is one of the biggest food retailers in the world and its main strength is its very low prices. If you have shopped at any Aldi supermarket, you know that their prices for fresh produce and even for packaged products are around 30% less than Wal-Mart’s.
Now the company is venturing into a new direction with its foray into the gluten-free and organic foods market, and we think it’s a threat to 365 By Whole Foods Market, the lower-cost chain owned by Whole Foods.
Aldi has now removed MSG, certified synthetic colors, and partially hydrogenated oils from products that carry their brands which is basically 90% of what they are selling.
In addition, Aldi is also set to expand its fresh and organic produce and meat selection, and this includes the Never Any brand which offers meat that have no added hormones, antibiotics, additives and animal by-products.
The chain has also announced that it is expanding its line of products for Simply Nature, which do not contain any of the 125 artificial ingredients. It also plans to grow its livefree brand, which offers a line of products that are all gluten-free.
The milk Aldi offers is already free from artificial growth hormones and it’s now doing the same for its other dairy products including cottage cheese, yogurt, sour cream and others.
Even more, Aldi is now offering fancy healthy foods like artisanal cheese, quinoa, smoked salmon and coconut oil so customers are given more variety in their shopping choices.
With Aldi’s plans to fix its biggest weakness (health food), it will be able to compete with not just Whole Foods but also Wal-Mart (Neighborhood Markets) and Kroger (Simple Truth). It’s definitely a game changer and the ones who benefit the most from this endeavor are the customers, who are now given better options for healthy produce and meats, and even better prices. The stiffer the competition, the better the prices. So it’s all good news for us consumers.
This chain has over 1,500 stores in the United States and intends to open 500 more over the course of 2 years, and have already set aside a budget of $3B for this.
Aldi, along with Lidl, have already upended UK’s grocery market forcing the biggest supermarkets in the nation to cut prices and lay off employees to remain competitive.
Asda’s CEO, Andy Clarke, considers this new cutthroat environment as the “worst storm in retail history.” Asda is the second biggest grocery chain in the United Kingdom and it has been negatively affected by Aldi and Lidl’s move. According to Clarke, the Wal-Mart owned grocery chain has suffered its lowest quarterly sales drop in the history of their company.
Aldi is able to keep their prices low by keeping their inventory to a small selection of private-label items. Traditional supermarkets, on the other hand, carry a lot of products from different brands. A single product may be carried by over a dozen brands which can make it difficult to keep their prices low. In addition, the chain also does not invest as much in merchandising and customer service compared to traditional stores. They simply display their products in their shipping cartons so they can quickly and easily re-stock. As a result, they hire fewer workers and thus fewer costs.
People who shop at Aldi also bring their own shopping bags and they even have to pay a deposit so they can use a grocery cart. When they return their cart, they will be refunded of their deposit. With this strategy, Aldi doesn’t need to pay workers to round up the carts. It’s really very cost-effective.
But that’s not all. Wal-Mart is also beginning to feel the threat of Aldi which now operates in 32 states and is poised to extend its reach to other states. We dare say Aldi has set its sights on a bigger slice of the American pie.
Sure, Aldi only has fewer stores compared to the giant Wal-Mart but because of the lower prices of products in Aldi stores, more and more people are shopping there. The West Coast expansion of Aldi has inspired long lines a few weeks ago in Palm Springs and other areas in Southern California. It’s a really exciting prospect for consumers everywhere.