What are Aldi’s key strengths that suppliers can focus on?

Namnews, 23rd June 2023

As we look forward to Aldi’s July supplier conference, their first since 2018, we ask IGD’s lead analyst for the Discount channel, Dan Butler, key questions on the future direction for Aldi; the growth opportunities, balancing sustainability in a price-led proposition and how suppliers can stand out from the crowd.

To learn more, direct from Giles Hurley, CEO for Aldi in Great Britain and Ireland, along with his leadership team and category product directors – join IGD in Birmingham on July 4th 2023 – for what will be a most informative and productive briefing for pro-active suppliers.

As Aldi grows to become ‘one of the big four’ – do you see them changing their model to serve more shopping missions?

I can’t see a massive increase in SKU count coming, as this goes against its efficient operating model. I expect categories will be evolved to meet the needs of shoppers and we are seeing some glimpses of potential in-store additions in other markets.

Adding self-service payment options, with self-checkouts being rolled out and Scan&Go being tested in the Netherlands, will help it to satisfy convenience missions. Food-to-go is an area that can benefit from a quicker checkout experience, so I expect this category to be expanded.

In-store dining and the testing of an online grocery delivery service in Germany are other exciting developments I am seeing from the retailer.

Sustainability – is this achievable as a price-led retailer?

It is achievable, and I think Aldi is in an advantageous position due to its efficient operating model and ability to control costs. Aldi won’t be able to do it alone however, with collaborative support needed from its suppliers.

The Aldi Supplier Conference will allow suppliers to understand the retailer’s sustainability aspirations.

In an inflationary market – do you see Aldi continuing to deliver volume growth for suppliers?

Store numbers are increasing, and more shoppers are coming through its doors thanks to its value proposition. The pandemic highlighted the need for availability, and I see the increased shopfloor space of new stores being used to facilitate this.

With the Global Sourcing Team in place, there is a greater opportunity for products to enter more of Aldi’s markets of operation.

What are the opportunities for Aldi that suppliers can help them with?

Aldi aspires to become a leader in sustainability and health. To achieve this, it will need to collaborate and partner with its suppliers, relying on their expertise in areas like packaging, supply chain management and animal welfare.

Nutritional transparency is becoming more important, and this is another area Aldi will need the support of its suppliers to achieve.

What are Aldi’s key strengths that suppliers can focus on?

Its limited number of SKU’s is the obvious one. If you can get into Aldi’s assortment, there will be little product competition on the shelves, so the volume potentials are great.

Having separate buying operations in each country allow Aldi to be quick to react to the local needs of shoppers. This presents many opportunities for suppliers, as long as they also understand the markets and local shoppers.

Loyalty is still not a feature for Aldi – do you see this changing?

Personally, I think the data gathering, retail media and shopper engagement opportunities are too great not to introduce a loyalty scheme. Only Aldi really can answer this, maybe a good one to ask during the Q&A session at the conference!

Is there anything that Aldi can do better on?

The limited range can sometimes be a barrier for shoppers, so a challenge for Aldi is how to satisfy the greatest number of shoppers with its assortment and maintain its efficiencies.

I also haven’t heard much about any retail media developments, a great way for Aldi to generate additional revenue to support its low-price proposition.

Find out more about the Aldi Supplier Conference here »

NAM Implications:

• A no-brainer need for any supplier wanting to optimise the Aldi opportunity.
• i.e. a retailer growing at 25% and 4th in market share of the UK grocery sector
• Even more reason, given rumours of an Aldi Nord-Sud merger?