ALDI Local, thinking small to sell big

ALDI Local
26 Mar 2019

ALDI, a German giant specialised in hard discounting and among the first 10 retailers in the world, is going through a strong growth in affluent markets (Europe, Unites States, Australia). Today it has more than 6000 stores in eleven countries and revenues around €80b.

In the United States, ALDI is realising an ambitious investment plan to increase its number of stores to 2500 by 2022. This would make ALDI the third biggest food retailer after Walmart and Kroger. Since last year, it has increased its distribution network in Italy as well.

A new emblem

The action from ALDI proves to be very innovative. Its last move was to launch ALDI local in England, a new emblem to compete directly in cities. The new store is of 600 square metres: a third less that usual store sizes with around 300 less references. It has been thought of in a way to gain the flux of people from the most populated urban areas.

Nonetheless, it is still double the size of a typical convenience store, a sector which according to the management team does not fall in the group’s strategic interests.

The store answers the need to try a new brand identity which distinguishes the new city format from its conventional counterpart. Already three “small” stores are located in London’s urban perimeter, but none of this marked by the name Aldi Local.

The urban market is different

England’s other food retailer brands (Sainsbury’s, Tesco and the German Lidl) aim for smaller sized stores to fulfil the needs of who lives and works in the city. The assortment does not include large or multi packaging since they are harder to carry for people who walk or cycle to or from the store. People instead value compact and light packaging.

ALDI’s spokesperson, has emphasized this particular aspect of the offer. In few words: “the main difference is that larger items are not being sold sine buyers would have a difficult time carrying them without a car”.

In the new urban format, prices will be as much as 5% higher even if the brand has tried to clarify that prices are still lower than average in the given area. The need of a different brand seems to be inspired from the aim to create a clear difference, in the eyes of the consumers, between the new city stores and the traditional ones. There are currently 620 of these formats in the country.

Now we need to see the results of the project in Balham. If this has success, it will build a base for the diffusion of the new brand in other urban areas, not just in the capital, as well as to the other markets in the world.

 

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