Monday, June 4, 2012

West Coast Bound - Aldi USA Headed to Southern California; First Stores to Open in 2013

Discount grocery chain Aldi USA is headed to Southern California in a big way -- and soon.

The hard-discount grocer, which is headquartered in Germany and has its U.S. corporate office in Illinois, will set up shop in Southern California in the coming months, with plans to open its first stores in the region in nine months to a year, Fresh & Easy Buzz has learned.

Aldi plans to open about 100 stores on the west coast during its first two years (starting in 2013) of operation, according to our sources who are familiar with the grocery chain's plans.

Aldi also has longer-term plans in the west, following those first stores in Southern California, to eventually open its small-format (about 10,000 square-foot) grocery markets throughout California and in other nearby western states, including Nevada, Arizona and others, according to our sources.

Aldi USA currently plans to build and open a distribution center in Riverside County, California, where Tesco has its 850,000 square-foot facility for its 190-plus-store Fresh & Easy Neighborhood Market chain, to serve its stores in Southern California and elsewhere on the west coast. Construction of the distribution facility is set to begin soon, according to our sources.

As part of its plans to open its first stores in Southern California in nine months to one year, Aldi USA is currently looking for a buying director and buying manager, both of which will be based in the region.

Aldi representatives are interviewing candidates for the positions tomorrow and Wednesday in Southern California. Once hired, the buying managers will move to Chicago for an eight month training period, where they will be trained at Aldi's corporate office and in its stores in the region. They, along with numerous other regional employees, will then be based in Aldi's west coast offices in Southern California.

The buyer manager candidates being interviewed this week have been selected for Aldi by an executive search firm, Reaction Search International.

In addition to the key buying/merchandising positions, Aldi USA will soon be hiring for other positions for Southern California and the west coast, ranging from other corporate headquarters functions to the planned distribution center in Riverside, and for the stores.

The arrival of Aldi in Southern California will be a major game-changer in the region, as has been the case in each market the discount grocer has entered in the U.S., which includes the Midwest, South, Mid-Atlantic, eastern and Southwest (Texas) regions in the U.S. Aldi currently has about 1,300 stores in the U.S.

Aldi, which is privately-held and keeps such developments very close to the vest, has not announced its upcoming plans for Southern California and the west coast, not is it confirming our report. But our information comes from multiple sources, all in positions to know the details reported on in this piece.

More to come...


JWE said...

Nice to have you back! FYI, F&E has been substantially playing with the Manhattan Beach store over the past few weeks. They've completely changed the look of the store with big photo graphics on the walls, new signage, and overall just lots of signs all over the place.

For example the meat refrigerators now feature small facades at the top to make the aisle look like an old-school butcher market with signs all over the place talking about the quality of the meat products. The overall look is nice but overwhelming. Lots. of. signs.

Anonymous said...

This may be the game changer in grocery retailing that many though TESCO'S entry into the market would be about 5 years ago. I personally think Aldi is the one retailer for Walmart to be very concerned with in regard to their grocery expansion plans in the western US. Since Walmart basically cannot compete on price due to stocking many major name brands vs Aldi's reliance on their own less expensive brands in almost all categories. My question is does this leave room for TESCO'S Fresh & Easy in an even more competitive market? Especially if Aldi does scale up to 100 stores quickly?

Fresh & Easy Buzz said...

Good to hear from you JWE -- and thanks for the information regarding the Manhattan Beach Fresh & Easy store.

We did some research with our sources, and here is what you are seeing:

The decor package, signage, ect. you see at the MB F&E is what Fresh & Easy calls its "Version 9 Decor Package." It's what the grocery chain has been putting in the new stores its been opening this year. It's adding them to some existing stores, like MB, as well.

As you might know, the MB F&E is the store closest to Fresh & Easy's corporate HQ/offices in El Segundo -- it's the store the F&E folks take visiting Tesco execs to, ect., for example. F&E also uses the store to test out new concepts, along with a couple others in Southern CA.

Therefore, for those reasons and a few others, adding the new store decor package to the MB F&E is a logical move.

Hope that helps? Let us know whenever you see something new.

PS: Do you like the new decor package as compared to the previous one?

Fresh & Easy Buzz said...

Anon June 14, 2012 3:37 PM:

Indeed. Aldi's coming to the west coast will likely be the most major food and grocery retailing development for the region in many years. Unlike Tesco with F&E, there will be very little hype on it from Aldi. While Tesco's launch of F&E was totally PR-focused, Aldi's will be grocery retailing and merchandising-focused: Walking the walk rather than talking the talk. That of course doesn't mean Aldi can't fail -- but as the man once said: I'll eat my hat if they do.

Aldi will put the most pressure on the discount operators in California. But it also will take share away from mid-range conventional grocers -- think Ralphs and Safeway/Vons, for example.

Anonymous said...

Do you think there's a speculation that Aldi may acquire F&E? I think there's one too many coincidence here; Riverside, 10,000 sq ft format...

Anonymous said...

The boss at Tesco finally states in public that they may close F&E if it continues to lose money.

Anonymous said...

I doubt that Aldi would want all the locations that F&E has. So say 100 of 180 stores being bought by ALDI South could be possible. Trader Joes which is owned by the other independent Aldi North, if I am not mistaken, has criteria practically "set in stone" as to the demographics of of the population where they will open new stores. I wonder if the ALDI South owned hard discount supermarkets in the US also have strict criteria as to where they will open?

Fresh & Easy Buzz said...

Anon July 3, 2012 11:50 AM

Thanks for the comment. There's no strategic cooperation between Aldi USA and Trader Joe's. Totally held separate.

Aldi overal, and Aldi USA, is very careful on store location siting. In fact, they already have many locations booked in Southern California. If Tesco were to fold up F&E, sure, Aldi might grab some locations, but that's about all I see at this point in time. Things can always change though, of course.


SoCalFoodBroker said...

Aldi coming to Southern Calif. plus Walmart opening a bunch of its Neighborhood Market supermarkets equals a game changer in Southern Calif. Add Winco's eventual expansion to that. All will force more price competition at a time when the existing supermarket chains need to keep as much margin as they can. It will be war.

Anonymous said...

Why only open stores in CA, when the state of WA has a huge German population, especially in Tacoma.

Unknown said...

We need an Aldi in Maricopa AZ (85138) We have SO Few choices here. We have Fry's. we have Bashas. And we have Walmart. Anything else is a 30 minute drive one direction.
An Aldi in this town would do AMAZING.

~ ~