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What you need to know for 11/19/2017

Kennedy: Aldi in process of remodeling stores

Kennedy: Aldi in process of remodeling stores

Grocery chain spiffs up stores, keeps approach to marketing
Kennedy: Aldi in process of remodeling stores
Aldi has eight stores in the region, including this one in Schenectady.
Photographer: MARC SCHULTZ

Earlier this week, a sizable crew in hard hats was busy remodeling the Aldi store in Halfmoon.

Some workers were on the roof, one was cleaning the big windows added to the south side near the entrance, and another was pointing the new stone facade.

The Route 9 store, closed since early August, will reopen Sept. 21, one of 1,300 that the no-frills grocer expects to upgrade by 2020 at a cost of $1.6 billion.

A similar face lift is planned at the Aldi store on Route 30 in Amsterdam by year’s end, according to a company spokesman. Aldi has eight stores in the region.

Aldi announced the modernization in February, just as another German-born discounter, Lidl, readied for a U.S. launch this summer, with plans for 100 stores by next year.

In markets where remodeled Aldi's have opened, newspaper reviews talk of higher ceilings, wider aisles (and a new cross aisle to ease navigation), wood tones and updated interior signs. Fresh fruits and vegetables are displayed better, and the back of the store features a full wall of refrigerated display cases, according to the reviews.

“The new look of our [Halfmoon] store will deliver on our customers’ desire for a modern and convenient shopping experience with a focus on fresh items, including more robust produce, dairy and bakery sections,” the Aldi spokesman told me in an email.

Some standards will remain, though: Items still will be displayed in their shipping cartons, and you’ll still have to bag your own groceries and pay a refundable 25 cents to use a shopping cart.

That’s part of the formula by which hard discounters like Aldi and Lidl make their money while keeping prices low, according to industry watcher Bill Bishop.

Bishop, a principal in the suburban Chicago consultancy Brick Meets Click, outlined the strategy this week in a heads-up to traditional grocers.

A big chunk of the discounters’ success, he wrote, comes from their limited-assortment “simplicity”: just a few thousands products overall versus the 30,000 to 40,000 found in a typical supermarket. There also are fewer options per product category, rather than several dozen.

“With a limited assortment, hard discounters benefit from higher sales per item, which translates into faster inventory turns, higher sales per square foot and lower cost of inventory per unit sold, and all of these lead to strong, solid financial performance,” Bishop said.

And while the discounters mainly sell their own private-label brands (over which they exert a lot of pricing influence), “they consistently ‘surprise and satisfy’ with products priced lower than the advertised brands, but of equal quality,” Bishop says.

Although he doesn’t expect discounters to become the dominant form of grocery retailing, Bishop anticipates some supermarket casualties.

He says the survivors will be the ones that start re-imagining their business and use technology to reduce costs and improve shopper convenience.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at marlenejkennedy@gmail.com.

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