Aldi Grows in New York City – Quietly
Aldi has opened its fifth New York City store, but this time it’s a bit more special because the store is in Manhattan, not the outer boroughs, so it may be more of a test for the format than the Bronx, Queens and Staten Island locations. As a RetailWire discussion noted a year-and-a-half ago, Aldi entered New York City in early 2011 quietly, and it is true of this store also. The chain supported the opening mainly with a circular and an email to local residents. The grand opening crowd was good, if not huge, and shoppers lined up expectantly for the 9:00 a.m. opening.
The unit is in a large shopping mall in Harlem on East 116th Street overlooking the East River. It shares the mall with Target, PetSmart, Marshall’s and, interestingly, Costco. Local competition is skewed towards bodegas. The nearest big chain supermarket is an extremely busy Pathmark at 125th and Lexington.
Compared to the bodegas, and the Pathmark for that matter, Aldi offers highly competitive prices.
Along with the low pricing, the new unit is a standard Aldi store, with 20,000 sq. ft. and 1,400 SKUs of the most popular consumer products. Center store displays feature cut cases, coolers make up most of the perimeter, produce is bagged and shopping carts are rented out. Around 99 percent of the items are private label. The only national brands are in the special buys promotional section, along with some non-foods/HBC items.
Aldi uses about 200 different labels in its private label program including Happy Farms, Welby, Beaumont, Boulder, Donut Store Brand Coffee, Gold Hen, Friendly Farms, Chefs Cupboard, and many others. In fact, at the opening, it was interesting to watch shoppers discussing among themselves — usually favorably — Aldi’s various store brands and to what they were equivalent.
Aldi banks heavily on the formula that has made this 1,200 store U.S. chain a success story: low prices, very high quality store brands, and a compact, easy-to-shop store. The chain promotes with weekly special buys and a circular available online. It also has a web page for products whose prices have been lowered. Shoppers can sign up for emails of the weekly specials and there is a smartphone app.
The chain is on a U.S. growth trajectory with 80 stores coming on stream annually across the country. More New York City units are planned — the next is Brooklyn — as Aldi makes itself a force in the metro market.
Will Aldi need to make any changes to the way it operates, such as being more promotionally aggressive, to make it big in the difficult-to-please New York City market? Given that it features an array of labels that are not familiar to many, will it need to add more name brands, increase sampling or make other changes to succeed?