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Following the launch of a pilot partnership with Instacart to offer grocery home delivery last year, Aldi is extending the service to additional locations.

Expanding the service to a major market

Last year, Aldi launched the service in Atlanta, Dallas and Los Angeles, providing shoppers with the opportunity to have their orders delivered in as little as one hour. The service is being expanded to shoppers across Chicagoland, Northwest Indiana and Rockford. This is a major market for Aldi, with almost 200 stores in the area.

Several retailers partnering with Instacart

The launch of the pilot grocery ecommerce service last year was the first for a hard discounter in the US. While several different ecommerce models have emerged in the market, several retailers have partnered with Instacart for home delivery, enabling them to build a presence at a relatively fast pace in the channel. Albertsons, Publix and Wegmans have all announced new initiatives with the company over the last 12 months. The channel continues to see increased investment as retailers scale up their presence as they seek to capitalise on a market which is set to double in scale by 2022.

Aldi investing $5bn in US operations

This initiative comes as Aldi undertakes a $5bn investment program in the US. In addition to investing $3.4bn to extend its network to 2,500 stores by the end of 2022, it is also investing $1.6bn in remodelling 1,300 stores by 2020. Partnering with Instacart will potentially help the retailer to reach new customer groups and gain share in the fast-evolving ecommerce channel. Recently it announced a pilot program to open up to ten stores in partnership with Kohl's, a clothing and homewares retailer in the US.

Discount retailing as a disruptive force

The discount channel has received a significant amount of attention over the last nine months in the US. In addition to Aldi’s investment plans, Lidl has opened its first stores in the market. This has led to intensifying price competition and new private brand initiatives from several major retailers. With Aldi also moving into ecommerce, it could start to impact two of the fastest growing channels in the US.

Aldi is set to boost its relationships with local suppliers via a new small-scale supplier scheme.

Increased local range

Aldi is offering small food and drink businesses in Scotland the chance to secure space on the shelves of its 78 stores across Scotland with the roll out of its new supplier development scheme.

The move follows Aldi’s announcement in May, in which the retailer unveiled plans to increase its Scottish product range by 14%, from 350 SKUs to more than 400 SKUS over a two year period.

The new scheme will place emphasis on Scottish provenance, with products included in the programme to be labelled with a Saint Andrew’s Cross.

Nurturing small-scale suppliers

Aldi will offer small businesses that meet the programme’s criteria subsidised costs, as well as assistance throughout the process from its Quality Assurance team. There’s no cap on the number of companies that can join the scheme.

Lidl US has started to offer online shopping in partnership with Shipt in Greenville, NC, according to reports in the Upstate Business Journal.

Membership based delivery model

Shipt is a membership-based grocery marketplace that delivers fresh foods and household essentials from a range of retailers. Members pay an annual fee of $99, and order via an app, providing unlimited free delivery for orders over $35. The company uses a network of ‘Shipt Shoppers’ to pick and deliver orders.

Fees and pricing model may deter discount shoppers

This is a major development for Lidl, which recently opened its 39th store following its US launch earlier this summer. While this will potentially extend its reach with new customer groups, many discount-focused shoppers may be deterred by both Shipt’s membership fee and prices. These can vary from grocery store prices by an average of $5 on a $35 order. The results of this localised test are likely to be analysed before any decision is taken on extending the program to additional markets.

Aldi partnering with Instacart for delivery pilot

This year, several retailers have started to offer online grocery shopping in the US. Many have partnered with third-party companies such as Shipt to build a presence quickly in this key growth channel. These include Publix, Wegmans and Aldi, Lidl’s main discount competitor, all of which have partnered with Instacart, with the discount retailer running pilots in Atlanta, Dallas and Los Angeles.

Discount and online set to be the fastest growing channels in the US

Lidl’s and Aldi’s ecommerce initiatives demonstrate the pace of change within the discount and online channels in the US. Both are forecast to be the fastest growing channels over the next five years, delivering growth of 7.6% and 18.1% on a CAGR basis respectively through to 2022. While offering online shopping is not typically part of the hard discount offer, the moves by Aldi and Lidl into the channel also highlight the growing focus retailers are placing on improving convenience and ease of access.

Presentations

05/09/2018
In this case study, find out more about the shortlisted entries for this year’s IGD Sustainable Futures Award. The finalists are: Aldi, Arla, Coca-Cola European Partners, Co-op, East of England Co-op and Tideford Organics.
23/05/2018
All you need to know about Aldi’s supply chain in two slides, including supply chain strategy, latest network developments and tips for greater collaboration.
20/09/2016
The discounters are looking for growth – in some markets this entails rapidly expanding store numbers and investing in online, in others product categories are growing and new convenience style shops are opening. This presentation looks at the latest developments and innovations in discount retailing and the impact each has on supply chain and the discounter operating model.
11/07/2016
Every week we publish the key news stories from the international FMCG supply chain. Here we look specifically at what we’ve seen from retailers in the first half of 2016 in the following channels.

In our third benchmarking release, we explore cost to serve. The ability to measure how much it costs to service customers is vitally important to ensuring profitability. 

Every half year we review the strategic developments in the supply chains of FMCG retailers. Check out what trends we've seen in H2 2015.

6 November 2018, Birmingham
A new category immersion capability event across eight Aldi buying areas. Find out how you can share in the continued growth of this ambitious retailer.

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A practical one day workshop for all roles in suppliers, to help develop your understanding of the vital part that supply chains play in underpinning FMCG businesses.