retail news in context, analysis with attitude

The New York Times offers an assessment of Aldi, the German discount chain, which it notes has prices that are cheaper than almost everybody else’s.

“Its stores are small and spartan, with minimal décor and a limited selection of products,” the Times writes. “They are often found in nondescript shopping strips and lack the flashy signs and window displays of some competitors. Grocery carts cost a quarter apiece, which is refundable after the cart is returned.

“But as the economy sputters and consumers look to save money, the privately held Aldi is suddenly emerging as a major force in the grocery business, one that some predict could one day rival Walmart … The company said recently that prices of its private-label products were 16 percent to 24 percent below those at discounters and big-box stores, and 40 percent less than those at traditional supermarkets.

“While the chain’s format might perplex some shoppers who are used to a much broader selection, Aldi officials have maintained that the advantage of shopping at its stores — cheap prices — quickly becomes clear.”

KC's View:
Aldi’s success in the markets it serves points out the importance for its competitors to be as sharp as possible on price, but also to find that other differential advantage – preferably a non-traditional differential advantage that has the potential of being a game-changer - that will permit them to appeal to consumers in a different sort of way.