Sunday, May 4, 2008

Aldi USA, the Fastest-Growing Small-Format Grocer in the U.S. Promotes Everything But the Kitchen Sink (and Maybe That's Next) In its Weekly Store Ads

Despite what you may have heard, Tesco's Fresh & Easy Neighborhood Market isn't the fastest growing, and its far from the biggest, small-format, convenience-oriented discount grocery store chain in the United States.

That honor goes to Aldi USA, the U.S. division of German-based retailer Aldi International, which like Tesco PLC has food and grocery stores throughout the world.

Aldi USA, which already has over 850 small-format, no frills (about 13,000 -to- 15,000 square foot) discount grocery stores stretching from the Midwestern USA, to the Mid-Atlantic and Eastern portion of the country, is adding about 100 new grocery stores each year in the U.S. for the next five years.

If Aldi USA stays on that course, the grocer, which already is the 24th-largest in the U.S. based on annual gross sales, will have somewhere in the neighborhood of 1,400 stores in America by 2013.

Aldi in America

Aldi USA, which opened its first U.S. grocery store in 1976, operates its stores under the philosophy of less-is-more.

It's small-format, no frills discount grocery stores average no bigger than 15,000 square feet and look like a slightly modern version of America's 1970's-era neighborhood grocery store.

The grocery markets carry about 1,300 of the most frequently purchased food and grocery items in the U.S., along with a limited selection of specialty items and various non-foods products.

At least 80% of the grocery chain's food and grocery items are under its own private or store brand labels. These store brand products range from basic dry grocery, refrigerated, frozen and fresh products, to specialty and ethnic foods' items.

The small-format, no frills discount grocery chain sells high quality fresh produce and meats at cheap prices, along with its limited assortment grocery and non-foods offerings.

The stores, similar to Tesco's Fresh & Easy Neighborhood Market in design, are essentially shrunk-down versions of a typical American supermarket.

However, unlike Tesco's Fresh & Easy, Aldi USA grocery stores have a much more specifically-positioned merchandising philosophy and format: basic groceries with some specialty items tossed in at the cheapest prices possible, along with a variety of general consumer products advertised each week in-store and in the grocer's weekly advertising circular.

Aldi USA's eclectic weekly promotions

Aldi USA does lots of in-and-out promoting of everything from major national brand groceries, which they don't carry everyday, to gourmet foods on occasion like "Whole Lobster for the best price in the U.S." and numerous ethnic foods items, usually tied-in with major events like Chinese New Years for Asian foods and the like.

But even more interesting, Aldi tends to promote everything--food and grocery products, furniture, computers, consumer electronics, flowers and plants, garden supplies, clothing and more--under the sun except the kitchen sink (which we bet is on the way) in its weekly advertising circular. These non-food durable and consumer products are promoted and sold on an in-and-out basis.

To say the ads are eclectic could be the understatement of the decade.

For example, take a look here at Aldi USA's weekly ad which breaks today, Sunday, May 4.

Aldi is promoting the portable GPS navigation system pictured above in its weekly ad circular this week for $189.

Sharing space in the current advertising circular with Pillsbury brand refrigerated biscuits, Klondike ice cream bars, fresh peanuts in the shell, fruit juices and frozen pizza, is an electronic video picture frame, a portable GPS navigation system for $189, an under-the-counter AM/FM kitchen radio, numerous gardening supplies for mom for Mother's Day next weekend, cosmetic items for mom, summer dresses for toddlers, and an eclectic assortment of other food and non-food items.

We forgot to mention the USDA Choice Bacon Wrapped Filet Mignon for only $1.99. And...the Vanderwall Bombe Accent Chest furniture piece for $99.99.

Did we say Aldi USA's weekly ads are eclectic ?

They work too. Aldi USA is growing its store-count so fast because the small-format, no frills discount grocery stores are super-popular and successful in the Midwest, Mid-Atlantic and Eastern regions of the USA.

Aldi's aggressive USA growth program

As part of its 100 new stores per-year growth program, Aldi also is moving into new states and further into regions in those states it's already in. For example, the grocer is making a big push into Florida, where it sees lots of opportunity for its brand of grocery retailing.

The no frills, discount small-format grocery chain also is moving into more regions in the eastern U.S., such as New York state and Pennsylvania, as well as filling out with more stores in those places where it already operates numerous grocery markets.

Aldi USA's focus in the Midwest is similar. The grocer is adding more stores in the regions where it already operates to create stronger critical mass and retail brand recognition, while at the same time moving into new, nearby regions where its opening its first stores.

More on Aldi's weekly ads

Aldi's weekly ads are like the one for this week described above each and every week: A mix of store brand grocery products, national brand products, non-foods items, electronics, furniture, clothing, and many other surprises.

For example, take a look here at Aldi's advertising circular for next week, the week of May 11.

The non-foods theme for next week appears to be automobile care. There's a two-ton hydraulic car jack for only $17.99, a "car creeper," those things used to get under the car to change the oil, for $14.99, and a couple more interesting car-related items which you will have to look and see for yourselves.

Most of the food items in the May 11 ad circular are national brands, rather than varieties of Aldi's various store brands, this time around. There's Tyson brand chicken products, Angel brand Soft bathroom tissue, Nestle Juicy Juice fruit juices, Kellogg's and Quaker snack items and a number of other branded offerings.

Aldi USA posts these weekly advertising circulars on its website at least one week in advance of the ad breaking, and it stays on the site until it ends. There's also a function on the website where people can type in their email address so they can receive the weekly ad circulars right in their email box prior to the ad's start-date.

The Aldi ad circulars (printed copies) also are mass mailed out to residents' homes and available in the stores.

Tesco's Fresh & Easy Neighborhood Market also posts its advertising circulars on its website. However, it's ads run for a three-week period on the website rather than weekly like Aldi's do

Additionally, although we searched for it, we can't seem to find a function on the Fresh & Easy website in which a customer or potential customer can put in their email address and receive the online advertising circular in their email box like one can with Aldi. Adding this function is cheap to do, and Fresh & Easy is missing the boat by not having such a simple yet powerful tool on its website. [If there is such a feature, and we missed it, it means it's hard to find because we searched all over the site for it.]

Lastly, no place on the Fresh & Easy website's home page does it tell you where you can specifically find the advertising circular. Rather, a user has to guess.

Instead of making you guess, we will tell you where it is: the advertising circular can be found by clicking on the link titled "Fresh & Easy Ideas" in the left-hand column on the home page. It is behind that link where you will find the Fresh & Easy promotional advertising circular.

Why not a link right on the website's home page that says: "Click here for Fresh & Easy's advertising circular/specials?" We think such a simple link would not only be fresh--but EASY as well. Doing so also will result in many more sets of eyeballs reading the Fresh & Easy advertising circular on the website, which we would hope if the retailer's goal.

Learning form Aldi USA's website

Tesco's Fresh & Easy could pick up some general marketing tips, as well as communications quality and ease of use tips, from viewing Aldi USA's website.

For example, Fresh & Easy is still using the exact same website it had set up before it even opened its first store in November, 2007.

The website is really a start-up site in terms of how it's set up rather than one for a grocery chain with 61 stores and about 90 more on the way before the end of the year.

For example, take a look at how the store listing link is set up on the Fresh & Easy website. If a user wants to see where the stores are, he or she has to click on maps, and go through a cumbersome process.

Why not, like nearly every other grocery chain and independent grocer website in the U.S. has, just put a simple list of where the stores are like this one. Fresh & Easy could keep the map function if it likes it, but add a simple store list for quick viewing along with it at least.

There is a zip code box on the Fresh & Easy website, where a user can type in his or her zip code and get a list of stores nearest them. This is a good feature. However, adding a simple store list, and updating it regularly, would make good sense in our analysis.

Food retailer websites are a marketing tool; an extension of the brick and mortar storefront, as well as being a corporate communications and informational tool. As such, they need to look clean, be simple to use, and provide as much information to the user as possible with the least amount of effort.

Fresh & Easy's website has some good features. However, it's overall look, usability and lack of features most other supermarket websites have, just screams "We haven't taken the time to modify the site since we opened our first stores last November." Marketing after all is everything a retailer does--including its website.

Is Aldi USA looking westward?

Meanwhile, there's been some talk since late last year that Aldi USA might start to look west in the USA for some of its small-format, no frills discount grocery stores.

Aldi International already has a western presence in part; the same family that controls the majority of Aldi International in Germany also is the 100% owner of Southern California-based specialty grocery chain Trader Joe's, another small-format success story.

Since the Aldi USA discount format and the Trader Joe's specialty grocery format are different enough that they wouldn't cannibalize each other--many Aldi and Trader Joe's stores exist close by each other in the East, Mid-Atlantic and Midwest already--Aldi USA executives have been exploring coming west with the small-format, no frills discount grocery stores, although it isn't a top priority at present.

The kitchen sink

Meanwhile, we just know one of these weeks we're going to find an Aldi USA weekly advertising circular in our email box that has, along with its normal eclectic mix of food, grocery, nonfood and consumer products...a kitchen sink advertised in it at a bargain price.

Resources at a glance:


Anonymous said...

You said the online circular is the same for 3 weeks. Is it different if you get it in the store (does it change every week)? Curious to know if the online circular is worth the effort or if it ends up outdated. Thanks!

this_is_cush said...

you CAN access the fresh and easy flyer on their homepage. I've done it. It's right above "newsroom & Blog". It's pretty easy to see too. All you have to do is select your location from the drop-down menu and bam! a Flyer pops-up in a new window. Pretty neat!