( Photo courtesy Bruce Peterson )

Aldi is a company that I have always been fascinated by; here is a company (Aldi Sud) that has over 1,800 locations in 35 states, has a revenue projection by retail analysts just north of $11 billion in 2018, yet they largely fly under the radar. You rarely read or hear anything about them, they don’t have a “voice” in industry issues and you rarely hear about the supply community aggressively seeking to sell them.

Yet let’s assume, for a moment, that their produce sales are 9% of total revenue (they don’t release these numbers, and I’m thinking they may under-index in produce sales as a percent of total sales). This company is doing roughly a billion dollars in fresh produce. And while it may be a little more or a little less, you can be sure they are selling some produce. Regardless of the actual numbers, Aldi is truly a success story. They continue to grow store count and revenue, and I would argue that they have been one of the rare European companies that has been successful in the U.S. By studying them, you can gain insights into how any business can prosper. Here are the things Aldi is doing that I find apply to anywhere:

> Focus: Aldi knows who they are. They don’t try to be Whole Foods or Wegmans. They don’t even try to be Trader Joe’s. They don’t try to add products or services that don’t make sense to their core value proposition — price. They believe in what they do and stay focused.

> Execution: Aldi executes their plan consistently throughout their network. Granted, the merchandising scheme is basic, but they can replicate it, in scale, profitably.

> Value proposition: There are four basic consumer value propositions: value (price), convenience, health/wellness, and indulgence. Aldi clearly dominates in the value space. And they took a page out of Sam Walton’s keys to success. To paraphrase Sam, “if a company can operate for less, they can sell for less.  And if you can sell for less, you will always have customers.”

> Fearless: I have always admired Aldi for their fearlessness. They don’t seem to be afraid of anyone. I have personally witnessed Aldi stores directly across the street from a Walmart store, and they don’t back down an inch. They don’t get caught up in the Amazon phenomenon. That’s not to say that they ignore opportunities to serve their customers, but they don’t compromise their core values to accomplish it.

One of the things I learned from my time at Walmart was that Sam Walton was a student of retail. We were always encouraged to spend significant time studying our competition, not to determine what they were doing wrong but to find what they were doing right. Aldi is an excellent example of how a company can enjoy success. This is not to say that every company should copy Aldi’s business model, but they can copy the focus, execution, value proposition, and fearlessness principles that can be applied to every business.

Bruce Peterson is a former produce executive with Walmart and president of Arkansas-based Peterson Insights Inc.

 
Comments
Submitted by Gene S on Tue, 10/09/2018 - 08:36

I have always respected Bruce for his professionalism and knowledge of the produce market and how it should be done. He is very accurate when saying Aldi manages their business very well, they sustain customers and bring in new customers every day. It is unique format that works. Especially now with more inflation and food price increases, stores such as Aldi will come out on top.

Submitted by Larry k on Tue, 10/09/2018 - 11:27

Aldis, please tell your employees not to dump one box of avocados into another box of avocados like they're rocks!
I've seen this done on many occasions. This bruises them and makes them unsellable! I don't like getting them home and throwing them out after discovering multiple brown spots on the fruit. Sometimes when you pick them up in the store they are so soft you can squeeze them like a water balloon. I've seen a very large number of soft, damaged avocados just sitting in the store waiting to be thrown in the dumpster.

Submitted by Really snowflake on Wed, 10/10/2018 - 07:06

You complain about the dumbest things in completely wrong venue Aldi doesn't manage this post or prob even view it you idiot. Tell them yourself you coward.

In reply to by Larry k (not verified)

Submitted by Barry on Sun, 10/14/2018 - 16:38

Are you serious ?? Aldi or one of the managers sees these stories and posts. I'm sure that if anything has some merit to it , at their next meeting it will be brought up. There is no union for the employees at the store level so they work pretty hard. They are always looking for new employees because of the hard work. You rarely see an elder person working there. The Bay Shore NY store produce section looks like crap. They have broken bananas, everything is mixed up, crushed fruit etc. Long Island NY could easily support 5 more stores.

In reply to by Really snowflake (not verified)

Submitted by Larry k on Tue, 10/30/2018 - 13:47

They wouldn't post my original reply to you. But you should keep your ignorant comments to yourself and stop calling people names. And don't hide behind your keyboard calling people you know nothing about cowards. Especially us war veterans!

In reply to by Really snowflake (not verified)

Submitted by Mary k on Mon, 10/29/2018 - 13:21

Really!!!
Get out and about more often.
Several independents across America have
Done a much better job of branding and staying focused on who they are and do not back down when a Walmart opens across the street.

Submitted by Kevin on Wed, 10/31/2018 - 12:58

I've always wondered if these experts and analysts actually go in to Aldi stores to see what the store conditions really are. They operate the worst Produce Depts I have ever seen. Rotten Produce thrown all directions. Bananas heaped up in a pile. Try going out and see some random stores, not the ones they prepped for your visit or photo op!