ver, which has U. S. headquarters in Englewood Cliffs, N.J.
The cohorts of the core discount shopper comprise a
multitude of smaller groups, including millennials and
seniors, who tend to strive to live within the limits of their
incomes and as a result tend to be especially savvy and
price-sensitive. They are used to making “trade-offs” in
their daily lives and plan their shopping trips and lists carefully, Unilever data shows.
Also, lower-income consumer spending is outpacing
that of higher-income groups and tends to disproportionately focus on discount products and discount retailers.
That, too, helps to explain the growing appeal of mega-
trends such as private label; the seemingly endless appetite
for new stores from focused brands such as Dollar General
and Dollar Tree; and an erosion of the customer base for
so-called conventional stores, which are losing sales and
trips to retailers perceived as providing better value.
By some definitions, those struggling to make ends meet
could be larger—and growing. Consumers making about or
just less than 400% of the federal poverty level—criteria to
be eligible for federal healthcare assistance, for example—
make up more than half of U.S. households and include
consumers one might otherwise consider middle class,
says Sarah Marion, director of syndicated research for the
Hartman Group, Bellevue, Wash.
“It reaches into the middle class a little bit,” Marion says,
“but once we saw the data, the shopping patterns are really
different once you cross that line. Those households have
to make difficult budgeting decisions every day. It’s, ‘Are
we going to have health insurance or are we going to send
Johnny to camp this year?’”
And as millennials become parents—especially not
Aldi’s $5 billion
the company will
have 2,500 U.S.
stores by 2022.
An ad in the same newspaper dated April
26, 1976, detailed “ 10 Reasons Why Aldi Sells
for Less,” including some things that were
revolutionary for its time and others that are
still staples of the hard-discount format. “We
have no bags. Bring your own box or bag—
we pass these supply savings to you,” was
one. Another: “We have no fancy shelving.
We sell right from the original carton—less
handling means savings for you.”
Back then, the idea that prices weren’t
stamped onto every item but rather indicated
on signage alongside the display took some
getting used to, but Aldi cast it as “labor
saved means savings for you.” The debut
store carried just 450 items, with prices
printed on paper sheets so customers could
take with them as they shopped.
The original Aldi store also had no
refrigeration equipment or freezers, which
limited perishables to onions, potatoes,
bread and margarine.
The treasure hunt of the “Aldi Finds”
section, coin-released shopping carts and
payment by credit card were still in the
future, but the idea that U.S. consumers
would shop for private label foods in a
no-frills environment if the price and quality
were there had been established in a way
that no store had done before or since quite
Aldi expanded to the U.S. from Essen,
Germany, via an undisclosed investment in
Benner Tea Co., a Burlington, Iowa-based
grocer. The company had been first acquired
in the 1960s by Charles C. Fitzmorris Jr., who
himself would go on to noteworthy things.
Fitzmorris, known as Charlie, was a 1933
Princeton graduate and former World War
II battalion commander who got into the
grocery business unloading freight train
cars for the Great Atlantic & Pacific Tea
Co. Fitzmorris was a brash and ambitious
businessman who, according to one source,
had proposed that Benner buy Aldi, and not
the other way around.
Fitzmorris trained under Aldi executives
in Germany and became the first president
of what was then known as the Aldi-Benner
Tea Co., before leaving to further pursue the
pioneering use of electronics in grocery. He
founded Worldwide Chain Store Systems,
which specialized in food management
software and counted among its clients
nearly all of the largest U.S. grocery chains.
It was eventually sold to IBM. Fitzmorris’
Benner Tea colleague, the aforementioned
Neally, succeeded Fitzmorris and was Aldi’s
U.S. CEO through 1999.
The original Iowa City store did not
succeed: It closed at the end of 1977, in part,
reports said, because the building was too
big to be efficient. Aldi returned to another
site near the same intersection in 1985 and
now operates out of a replacement that
opened about a mile away in 2014.
More than 40 years and nearly 2,000
stores later, it’s safe to say Aldi has
succeeded, and quite presciently:
Lean, private label-focused small stores
are in style and the value shopping trend
has never been stronger.