When it comes to Aldi, it’s time to “mind the gap.” Why? Aldi has transformed itself from a limited assortment retailer into a promotional merchant with a strong price reputation. The net result is an extremely disruptive force in an increasingly competitive grocery landscape. Fellow retail veteran Bill Bolton and I recently sat down for an in-depth discussion about Aldi's transformation. Here are five changes that up the ante in the competition for grocery dollars.
The entire
retail landscape is changing. This is challenging all types of suppliers, but it can also present growth opportunities when looked at from a new
perspective. The key is to identify growth opportunities in places where
growth is already happening. Here you will learn how the changing shopper, the evolving mix of stores, and value chain realignment are creating those opportunities.
No one is satisfied with the costs incurred in executing online grocery because it erodes profitability. We asked Marc de Speville, who has been analyzing online grocery's evolution across three continents, to explain how European markets are experiencing and managing the profitability challenge.
It’s clear that the growing number of online grocery options available to US consumers will only further fragment the market for grocery spending, but will the growth of online shopping also accelerate fundamental changes in the competitive marketplace? What if small, high productivity hard-discount retailers like Aldi could use online grocery in the US to generate additional growth?
When the team at Good Eggs realized there was a gap between
who they originally thought would use the service and those who are their
regular customers, they pulled back to a single market to realign their
business model. It’s an unusual move that was covered nicely by Joe Fassler in
a recent blog. To us, it highlights several of the challenges that face new
grocery services – be they online or offline.
The good news – you’ve expanded from traditional grocery to
include online shopping services and listed all of the products you sell along with
some basic attributes on your website. The bad news – you’re not finished yet. John
Hennessy has identified an interesting problem he calls “digital out of stocks”
that can result not only in missed sales, but lost customers as well. Here, he talks with us about what digital out of stocks are and how to fix them.
If retailers
want to win more sales in today’s competitive market, it’s time to take another
look at shopping trips and the needs that drive them. Understanding the needs that
drive “trip missions” is a proven way to quickly connect with shoppers and earn
more business – but today those needs are being influenced – and facilitated –
by digital tools and online options. Here, we update the view of six trip
missions to take the new digital influences into account. Use them as a compass
to align marketing and merchandising with the evolving priorities of your core
shoppers.
IGA's new Better Choices program is yet another signal that health
and wellness is now being seen as a mainstream issue for food retailers – by independents as well as chain grocers. “As businesses,
we’re challenged to reconcile all the ways people define health and wellness
because it impacts their purchasing decisions,” says Kim Kircherr, RD. who helped guide the development of the Better Choices program, which offers advice and support to both IGA customers and retailers about making healthier food choices.
Meal kits are certainly not for every consumer, but every
grocer should be paying attention to them today. The new flood of ad-hoc
and subscription
meal services isn’t just another set of competition to manage around -
their very existence signals that important market forces are
at work. These solutions are on trend today and if you unpack their
layers, they have alot going on below the surface. Here’s a my take on
how to better understand the opportunity and catch the wave.
Aldi
has shifted its focus from operating efficiency to marketing/merchandising
effectiveness over the past few years. This pivot has enabled
it to grow a lot faster than the market – and without having to cut
margins. In a slow-growth environment, that’s an amazing and significant accomplishment
that merits a closer look and a little discussion.
It looks like many smaller markets in the US will help lead
the way in the growth of online grocery shopping – especially with the
assistance of entrepreneurs who are creating online ordering and
delivery apps/services that regional and independent retailers can plug
into their offering. What can we learn from these delivery apps and the retailers who partner with them?
Customers who sign up for subscription shopping are looking
to satisfy an unmet need: to always have
a product on hand, without having to think about it or work too hard. This shopping shift impacts both traditional grocery retailers who now have one more source of new
competition (unless, of course, they’re offering it) and CPG’s who need to adapt their go-to-market strategies to accommodate the fragmentation.
Millennials
are thinking differently about their health than older generations, and the
shift suggests some interesting potential opportunities for retailers. The new generation
seems to have shifted emphasis away from “who
will make me healthy” to “what
will make me healthy.”
Amazon’s new private label diaper line, Amazon Elements,
shows they are willing to compete directly with big CPG brands – something that
many retailers will not do because of their dependence on the brand’s
promotional support.