Last updated on December 12th, 2024
One of the keys to Aldi being able to keep prices low, quality high and on-trend products rolling in is its strong relationships with suppliers.
Those relationships came up frequently during a recent store tour conducted by Shaun O’Keefe, regional VP at the company’s Jefferson, Georgia, distribution center. The tour, conducted for journalists at the Aldi in Atlanta’s Buckhead neighborhood, focused on how the retailer structures its operations to save area shoppers money – as much as 40 percent – on their grocery bills.
While Aldi carries some national brands that some customers might view as necessities, 90 percent of the items on the shelves are brands exclusive to Aldi. The chain works with many different suppli- ers, including national brand and other large private brand suppliers, O’Keefe noted, to come up with its curated range of food and non-food items.
Honing in on top sellers
Since Aldi’s stores are considerably smaller than most of its chain and regional grocery competitors, the company is highly strategic about the items it chooses to carry on its shelves.
That starts in the produce department.
“When you look at our overall selection for produce, compared to a traditional grocery store, we have a fraction of the number of different SKUs to choose from. However, we cover 90 percent of the typical person’s produce shop,” O’Keefe said.
“That’s done specifically for us to be able to stick to items that are, first, the most desirable for our customers, and also allows us to really work hard with our suppliers and partner with them and make sure that we’re getting the best quality.”
The fresh meat case follows the same philosophy as the produce department; there are about 100 SKUs of the most frequently purchased products. A “super popular” item in the case is the company’s organic grass-fed ground beef.
“It’s actually our No. 2-selling fresh meat item, this 100 percent grass-fed ground beef; $3.99 for the package,” he said.
The fresh meat case also offers fresh chicken, pork, sausages and 100 percent sustainably sourced, fresh-never-frozen seafood.
“We sell a ton of seafood. In Atlanta alone, we did 300,000 units of salmon last year,” O’Keefe said. “We couldn’t be more proud of our seafood selection and our offering, and our customers have responded to it very well.”
Refrigerated dips have been a big growth category for Aldi over the last few years, and O’Keefe credited suppliers for working with the grocer to create “some really unique and cool items for us to offer.”
The company that supplies Aldi’s popular cranberry chicken salad has been making it for 18 years, he said. It’s available in both multi-serving tubs and single-serving cups for quick meals or lunchboxes. Other popular dips include spinach, guacamole and hummus.
In the dairy case, a current, on-trend choice is Hot Honey Gouda Cheese, a summer seasonal item.
Later in the year, when it’s holiday and entertaining season, the company will ramp up its cheese offerings for those who have identified Aldi as a more affordable option for charcuterie board elements.
“We will change out the cheese range relatively regu- larly, specifically with trends, like with hot honey being a really popular trend,” O’Keefe said. “As we get into holiday season, we change the set quite a bit and expand a lot in cheese [selection] because we’re definitely a charcuterie destination around the holidays … I can’t count the number of charcuterie boards my wife makes from November to January.”
On the bakery aisle, Aldi strives to cover the shopping list for most consumers.
“In the bakery area … it’s certainly a curated range compared to what you would find at other traditional grocery stores. But, again, you will find everything that you need here. We’ve got keto-friendly wraps and breads, gluten-free products, all the way to brioche buns, French baguettes, sourdough loaves, sprouted bread,” O’Keefe said.
Whatever the stores carry, the grocer is careful to never lose sight of the bottom line – customers won’t repeatedly buy inferior quality food even if the price is low.
“Keeping the prices down is really important for us; you want to have the retails be at [the level] that we’re known for, for being a price leader. But at the same time, everybody can buy something that’s really cheap, try it and if it’s not good, they’re not coming back,” O’Keefe said.
“So, for us, it’s really important that we have really good quality, good-tasting food at the prices that we offer. We’re not going to skimp on the quality of the food; we’d rather find other ways to save to help pass those savings on to the customer.”
This philosophy carries over to the wine and beer aisle. Though most of the wines and six-packs sold at Aldi are less than $10, the grocer works directly with vintners and breweries to make sure the products meet quality standards, according to Arlin Zajmi, director of national buying and certified wine specialist, who spoke about Aldi’s success in those categories.
[RELATED: Aldi Gaining Steam Across Southeast]
Equal … or better?
When Aldi is working with suppliers on exclusive brand products, the goal is to have as good – or better – quality than the national brand “benchmark” product.
For the journalists on the store tour, Aldi set up a table with national brand products beside similar Aldi- brand products.
Sometimes there are noticeable differences, such as with fruit rings cereal. The taste is similar, the texture is similar, but the color is different.
“One of the reasons for that is maybe what’s not in our product, which is any artificial or synthetic colors or flavors,” O’Keefe explained. “For our fruit rings, we’re using turmeric, beta carotene, paprika to get the color … so you do see a little bit of a dullness in the color because of that.
“But that’s a decision that we made, feeling really confident in the fact that we want to make sure we’re offering a clean, high-quality product to our customers even still at a significantly lower price.”
Aldi goes to great lengths to ensure its products measure up to the competition.
“We do 35,000 product samples in our sampling kitchen in our corporate office [in Batavia, Ilinois] every year, and our suppliers have told us that we sample our product way more than any other one of their customers,” he said.
Buyers, assistant buyers, quality assurance staff, professional chefs, etc. – “all the people involved in curating these products for us” – spend time sampling the product and then working with suppliers on refor- mulating it if it’s not where it needs to be, according to O’Keefe.
For its stackable potato crisps, Clancy’s Stackerz, it was a multiyear process to get it right, O’Keefe said.
“It took us almost eight years to get that product formulated to be exactly to the quality standards we wanted to be able to be sold on our shelves. I don’t know how many times it was sampled, but I’m sure at least 10 to 15 times, and each time there was a reformulation done to try to get that right. And we finally got it right.”
At times, Aldi has brought in consumers to test and give feedback on products, and each year it invites customers to go online and vote for their favorite Aldi exclusive products. The Fan Favorites list is revealed in the fall.
But the teams are not just testing new items; they’re retesting items, too.
“Just because we’ve been carrying a product for a certain number of years, it still continues to get tested to make sure it’s still hitting those quality benchmarks for us.”
Aldi’s supplier relationships also come into play when a trend presents itself that the grocer would like to test out. Kettle potato chips are a popular, year-round Clancy’s brand item; what if, for the always-rotating Aldi Finds aisle, there were some less traditional flavors available? That led to the creation of Maui Onion Style and Chili Pepper with Lime kettle chip varieties.
“Aldi Finds is probably our No. 1 area where it’s a great testing ground for our buyers to say, ‘OK, what’s really on trend?’” O’Keefe said.
The stores may carry the products for a couple of weeks and gauge shopper response and also figure out how – and if – it fits into the company’s supply chain operations.
“We can try something that’s really unique and different, that we’re not sure if it’s really even a trend yet. We’re going to try it out and see how it goes.”
The journalists also were able to test new Barissimo Iced Coffee, a product that hits shelves in September. It was topped with Barista Sweet Vanilla Cold Foam, a fairly recent product addition at Aldi that has become a hot seller.
“People are looking for ways to save money, to be able to have that coffee experience in their own home. We’re really excited to be able to bring this to life … you don’t need to go to Starbucks to get your amazing iced coffee in the morning.”
Standing behind products
Its product testing procedures and supplier confidence give the grocer a strong basis for offering its Twice as Nice guarantee.
O’Keefe acknowledged that most companies say they stand behind their products, but Aldi takes it a step further.
“For us, it’s really simple. If you have anything that you buy from us, that’s our [exclusive brand] product, that you don’t like for any reason – we don’t even care what the reason is; we would like to know if you’d like to share but you don’t have to – we’re very happy to have it exchanged. And then we will also give you your money back. So we call that our Twice as Nice guarantee.”
All the customer has to do is go to the store and talk to an employee; no forms to fill out or manager or customer service desk to find.
Asked how much money the company loses by offering such a generous return policy, O’Keefe said, “Not much.”
“There are not very many double quality guarantees or Twice as Nice guarantees that we deal with. But it is there in case anybody feels like, ‘Hey, I don’t know if I want to try these. I know I love Froot Loops, but they look a little different. I don’t recognize Millville [brand].
“For us it’s a way to say, ‘Try it. If you don’t like it, there is literally no risk and you could come out ahead with something else and your money back. It’s something we push really hard, as just a no-questions-asked policy. We’re not trying to control expense on making sure people have excellent products.”
Aldi Finds keeps excitement in aisles
Grocery shopping can be a mundane task. Aldi attempts to change the narrative with Aldi Finds. While some Aldi Finds are food items (like the kettle chips mentioned previously), a large proportion are non-food.
Stores get in about 100 new Aldi Finds every week, and once the products are sold out, the stores won’t be restocked on those items.
“There is a ton of excitement about this area in our store every week,” O’Keefe said. “We really use this section to be able to hit really key trends at specific times.”
The Aldi Finds aisle features chain-exclusive brands like Crane, Serra, Garden Line and Lily & Dan, but also some national and licensed brands.
“How do we decide what to carry? A lot of what our buyers spend their time on, especially in these categories, is new trends,” he said. “The buyers for these products develop long-term relationships with suppliers all over the world and have these products made based on our specifications, for us.”
