Are Aldi’s upscale makeovers necessary?

Since entering the U.S. in the Midwest in 1976, Aldi has been routinely described as “bare bones” and “no frills,” and that helped convey its deep-discount message. Now, many of its locations are undergoing major renovations to make them a little more upscale to better compete with everyone from Kroger to Trader Joe’s and Whole Foods. The refurbishments include modern design, wider aisles, open ceilings, natural lighting and digital signage promoting the quality and freshness of its in-house brands. While still employing open carton displays as a money saver, the boxes sit on shelves rather than other boxes. The stores are about 20 percent larger, with a fresh section a central focus. The changes come as Aldi has upgraded its food offerings, including adding more organic foods and antibiotic-free meats as well as expanded produce, dairy and bakery sections. "We have a better product offering and expanded product range, and it's a much cleaner and nicer environment," Ryan Harmon, director of store operations for Aldi U.S., told ABC Action News in Tampa. The remodels support Aldi’s ambitious plan announced in July 2017 to become the third largest U.S. grocer in five years. The goal is to reach 2,500 stores by 2022, up from about 1,600 currently. A Business Insider review described a remodel of Richmond, VA location as “almost identical” to 365 by Whole Foods. The makeovers come amid heightened competition marked by Amazon.com’s acquisition of Whole Foods, the arrival of European rival Lidl, and bigger pushes into grocery by Walmart, Target and dollar stores. While sprucing up its stores, Aldi claims it won’t be raising its prices and remains committed to having more than 90 percent of its mix consist of store brands to drive savings. Shoppers will still be encouraged to bag their own groceries and use its 25-cent cart rentals to keep prices down. But the chain risks alienating its fans with its upscale changes. "Although they are trying to add more organic options and things like that, it's important to keep the customers they have," Madeline Hurley, an analyst at IBISWorld, told Bloomberg. "The balance is crucial."

• Aldi Spends $1.6 Billion on Upscale Look With Downscale Prices – Bloomberg
• Aldi goes upscale, sheds dollar store image – ABC Action News Tampa Bay
• New Aldi store in south Salina bigger, more options – Salina Journal
• ALDI Ramps Up US Expansion with Goal of 2,500 Stores by End of 2022 – Aldi U.S.
• ALDI Unveils $1.6 Billion Nationwide Store Remodel Plan To Enhance Customer Shopping Experience – Aldi U.S.
• Aldi is fixing a major weakness and coming straight for Whole Foods – Business Insider