Food inflation has been a headache for major grocers but an opportunity for a once obscure discount grocer with a quirky culture.
The fastest-growing grocery chain in the U.S. (by store count and foot traffic) is probably not the one you think it is.
It might be one you’ve barely noticed or never visited. Its e-commerce capability is practically non-existent by comparison to its competition.
Its stores are about half the size of the average grocery (18,000 square feet versus 38,000). Produce is often displayed in large shipping cartons that clog the aisles. You won’t find your familiar national brands—roughly 90% of what they sell is private label brands.
The selection of available goods will change from week to week. If you want a shopping cart it’ll cost you a quarter to rent one (refunded when the cart is returned) and you better bring your own bags because there aren’t any in the store.
Welcome to Aldi, easily, the quirkiest (and yet most interesting) discount grocery retailer in the world but also one of the largest, with a fleet of about 12,000 locations.
It is also one of the oldest, with roots stretching back to pre-World War II Germany, and named by combining the first two letters of family that started it—Albrecht—and Discount.
Among customers, it is one of the most popular, according to annual surveys by YouGov.com.
In 2011, Aldi had just 1,140 stores in the United States. Today the number is nearly 2,500 and on track to breach 3,000 by the end of this year, marking the brand’s rise to grocery store prominence, surpassing its nearest rival, Albertsons.
Aldi’s foot traffic surged more than 12% in 2024’s fourth quarter, according to eMarketer.com.
The fuel for Aldi’s success has been its deeply discounted prices, made possible by fewer employees doing things like retrieving shopping carts (thus the 25-cent rental fee) and stocking shelves (thus, open shipping cartons in the aisles); only stocking goods that turn over quickly; and a deep bench of quality private label products.
The pandemic and food inflation helped super-charge Aldi’s growth.
It consistently ranks as the least expensive place to shop for food and household essentials. Finding an Aldi used to require determination, according to the authors of “Bare Essentials: The Aldi Success Story.” Stores were (and still are) sited on side streets or in peripheral areas where rents are lower but located near big competitors.
The typical Aldi customer also visits a traditional large grocery store.
Put it all together and you begin to understand why Aldi enjoys a cult-like status among inflation-weary consumers.
But price isn’t the only attraction.
Fans describe shopping at Aldi as something of a treasure hunt. The strategy is to hit Aldi first, and then go to a full-scale grocery for what you want that Aldi didn’t have that week. Sounds familiar, think T.J. Maxx or Marshalls.
The treasure might be an amazing low price for fresh strawberries, but it also could be a bargain on a pet sweater, or maybe a chainsaw, found in Aldi’s most-quirky feature, a section the company calls “Aldi Finds” but has been dubbed by fans as the “Aisle of Shame.”
It’s the center section in most Aldi stores, featuring a constantly changing collection of products. On the subreddit r/Aldi, one enthusiast explained, “It’s where you can find weird s— you never knew you needed. Last week, I found a queen comforter set marked down for $3, a hanging plant basket, a metal watering can, and some pickles.”
The shame, according to some accounts, is the shame felt upon returning home from an errand for food essentials like eggs and milk, and having to explain why you also bought, for a recent example, a trombone.
An “Aldi Aisle of Shame” Facebook community has 3.5 million members.
Groups of customers organize one-day blitzes in a rented van visiting a dozen or so stores to check out their Aisles of Shame.
It would be easy to attribute the success of Aldi’s to current economic conditions. The company’s DNA was formed in the devastation and poverty of post-World War II Germany, when food inflation was much worse than it is today.
But as a retail industry veteran and advisor, the secret ingredient for Aldi is the element of surprise, which is the experience consumers love most—finding an item they didn’t know they needed and/or a bargain they weren’t expecting. It’s hard to surprise or delight customers in a sprawling suburban grocery store that carries everything in every brand in every variation.
It turns out that surprise is also profitable.
Aldi is privately held. So, detailed financials are scarce, but some analysts estimate that sales of Aldi Finds merchandise account for 20% of annual revenue.
“The customers who come in and only buy milk and eggs are not great for Aldi,” retail consultant John Clear told CNN in April 2024. “You have to get that customer who comes in once or twice a week to also pick up some other products. That’s where this aisle of shame fits in and helps Aldi offer its low prices overall.”
One thing is for sure, it’s clear that Aldi understands what many of its customers want—and is delighting them.
Read the full article here
