Are Aldi’s customers who you think they are?


When news broke last year that Aldi was testing home delivery in several markets, many questioned whether the service was aligned with the hard discount grocery brand’s image and the customers who shop in its stores. Similar concerns were expressed more recently about Aldi’s test of curbside pickup in select cities. While some continue the debate, Aldi meanwhile has announced it is rolling out home delivery on a nationwide basis in partnership with Instacart.
The rollout will take the service to 75 major markets in 35 states, including Miami, Minneapolis, New York City, Raleigh, NC and San Diego. Aldi tested home delivery in Atlanta, Chicago, Dallas and Los Angeles before making the decision to expand.
“Aldi is a pioneer and a leader in creating a shopping experience that works with people’s busy lives,” said Jason Hart, CEO of Aldi U.S, in statement. “Our partnership with Instacart and the expansion of our e-commerce options are more ways we are meeting the growing needs of today’s shopper, who wants high-quality food at unbeatable prices.”
Instacart CEO Apoorva Mehta called the reaction of customers in the test markets “overwhelmingly positive” as he expressed confidence in the two companies to grow in the new markets where home delivery will be made available to Aldi’s customers.
Those who want home delivery can place their orders online through the Aldi page on Instacart.com or by using the delivery service’s app. Those new to the service can receive $10 off their first three orders of $35, or more by using a promotional code.
Aldi, as widely reported, has been on a growth tear in recent years, investing more than $5.3 billion in remodels and new store openings. The chain has set a goal of becoming the third largest grocer by store count, from its current 1,800 locations to 2,500, by the end of 2022.
The grocer, which primarily sells private labels billed as meeting or exceeding national brand quality standards, announced last month that it was expanding its selection of fresh foods, organics and easy-to-prepare dishes by 40 percent. Aldi offers a guarantee that gives customers unhappy with a purchase both a replacement product along with a full refund.
- Aldi Continues Growth Momentum with National Instacart Rollout – Aldi U.S.
- Will Aldi upset the grocery home delivery cart? – RetailWire
- Aldi shoppers are getting curbside pickup, but do they want it? – RetailWire
- Are Aldi’s upscale makeovers necessary? – RetailWire
DISCUSSION QUESTIONS: Are you surprised that demand for home delivery from Aldi in test markets was strong enough to warrant a nationwide rollout? Can Aldi offer services such as delivery and store pickup along with expanded selections of fresh food, organics, etc. and maintain its reputation for being a hard discount grocery operator?
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13 Comments on "Are Aldi’s customers who you think they are?"
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Chief Executive Officer, The TSi Company
Managing Director, GlobalData
The downturn of 2008 changed a lot of things, among them attitudes about shopping. There is now very little stigma to shopping at value players and discounters, indeed, it is seen as savvy. That’s why Aldi’s customer base has, for a long time, consisted of a wide mix of demographics and income groups. Some of these groups like low prices but also value the convenience of home delivery; this service is aimed at them.
By offering discounts on the service Aldi will damage margins, but it will also help it to grow market share as it will likely increase the frequency of shop. That said, partnering with Instacart is a low-cost option for entering the delivery market, which allows Aldi to leave its simple no-frills business model intact.
Founding Partner, Merchandising Metrics
I think this proves retailers at every tier have to offer convenience and ease of shopping. Just like e-commerce retailers who offer seemingly unlimited returns. I don’t know how they do it, but so far so good (right … ?).
Principal, Cathy Hotka & Associates
Despite the quality merchandise and low prices, shopping at Aldi can be a challenge. Customers who want to stock up have to buy by the case, or bring their own containers. The closest store may be 10 miles away. Home delivery would not only make shopping easier, but might encourage customers to purchase much more. As I said yesterday, I don’t think home delivery is table stakes for every grocer — but it might be a boon for this one.
Retail Transformation Thought Leader, Advisor, & Strategist
President, b2b Solutions, LLC
The short answer is no. As the article’s headline implies Aldi’s customer base is far broader in terms of socio-demographics that some might expect. For the vast majority of the population the idea that someone must be have a lower income to seek value in the purchase has long passed. A prime example was an article in yesterday’s Chicago Tribune entitled “Ways the wealthy sit on their cash.” Number 5 was to use coupons.
Home delivery is no longer a new concept. This issues for grocery retailers are how to do it right and who pays for it — them or the consumer.
Head of eCommerce, Tuft & Needle
Before we know it, having groceries delivered to your home will be no different than ordering beauty products, fashion products or other staple goods online. Aldi and other retailers realize this and have made efforts to bring it in-house (Target purchasing Shipt) or partnered with a company that has the infrastructure built already (Aldi with Instacart). Despite the cost increases, Aldi could go the way of other online grocers by selling ad space similar to how brands can buy store placements in brick-and-mortar. Walmart, CVS, etc. (through Triad Media) and many other retailers have implemented this on their online platforms as a way to generate incremental revenue, which helps offset the massive investments they are making in the logistics space.
This is a fast-growing transformation of the grocery logistics space and I believe Aldi is making the right push to build more brand loyalty through convenience. Name one consumer that ever said, “I want life to be less convenient.”
Principal, KIZER & BENDER Speaking
People who love Aldi LOVE Aldi. It’s always a favorite in our consumer focus groups.
You know how people become loyal to one grocery store (and lose their minds when the store does a reset)? That’d be me. I am not an Aldi shopper but my husband is, and so are our Millennial children. My well-heeled friend, who has unlimited grocery choices where we live and could shop anywhere, prefers Aldi. So no, this doesn’t surprise me at all.
Principal, KIZER & BENDER Speaking
Chief Amazement Officer, Shepard Presentations, LLC
I can’t forecast if delivery is a good move for Aldi, but I can tell you what customers want. They want convenience, and if grocery delivery is what they want, and they don’t get it from Aldi, they may try and find it elsewhere. (And it is available elsewhere.) So if Aldi’s customers are demanding delivery, then they have to deliver. The opposite is also true. Apparently, many feel the typical Aldi customer may not care about delivery. That’s why this came as a surprise. Aldi knows. They understand what they need to do for their customers and what they need to do to remain competitive.
Managing Partner Cambridge Retail Advisors
Vice President, Research at IDC
No surprise. For Aldi the partnership is key. The test is really testing Instacart’s ability to service Aldi customers, not whether customers will buy Aldi products for home delivery. Aldi has shifted the burden and cost (and potentially profits) of home delivery to their partner, expanding their brand’s convenience factor.
The second key part is the fact that most if not all Aldi products are private label — you can’t get them anywhere else. Home delivery becomes much more attractive to existing Aldi customers.
For Instacart, the issue of substitutions can be a concern with a much smaller assortment than most grocers — potential out-of-stocks — but this was probably already factored into their relationship. Aldi has strong loyalty, high quality offerings, and is known for their fresh product.
I won’t go so far as to say that this will be a home run hit for Aldi, but it will improve convenience for customers who already love the brand.
Co-Founder and CMO, Seeonic, Inc.
I am a bit surprised at the positive response for grocery delivery from Aldi. Aldi has a changing product offering in fresh food and their customers go to the store looking for lower prices than the competitors. Its customers must want convenience and lower prices to pay for at home delivery.
Aldi can offer more fresh foods, etc., but it will need to work harder at providing them to stores as a regular selection so consumers can expect their favorite items to be in the stores when the consumer wants to buy them. Of course, it will need to continue to be a low cost grocery provider to maintain its history of being a discount grocer. Achieving both of these goals will be challenging.