The Real Reason The Pandemic Is Causing Aldi To Thrive
America's retail industry may be getting hammered by the coronavirus, but there are a few companies that are thriving in spite of the gloom. The combined effect of job losses and staggering grocery price hikes around the country have given discount retailers like Aldi and Dollar General a boost, even though both stores had already been thriving before the pandemic.
The German discount retailer is scoring points with American buyers because of its business model, which offers a no-frills shopping experience and a limited range of products. Aldi also manages to win over the hearts and minds of its most loyal followers by giving customers what they want, which is to give shoppers quality products without the bells and whistles (via LiveChat). "Aldi is perfectly positioned as the low-priced leader. A family with five kids and a rescue pet spending $200 a week of groceries at a typical supermarket chain is spending $120 to $140 a week at Aldi," retail strategist Burt Flickinger told CNN.
Aldi isn't the only store thriving during the pandemic
Aldi has also shown itself to be adaptable in the midst of the pandemic. In Australia, a member of Aldi's senior management said they had discovered how important it was to have and maintain a strong relationship with its suppliers, which ensures that its shops stay well-stocked (via Yahoo News). It's a lesson which it will likely carry into Aldi's other markets around the world.
Dollar General is also expected to pick up support among shoppers who may be feeling the pinch caused by the pandemic. With its 16,000 stores, Dollar General's formula of offering low-priced groceries, proximity to customers, and smaller stores have made them a hit with low- and middle-income shoppers who are located in rural areas. Most Dollar General stores can be found in towns where the population is at 20,000 people or less, and analysts say this has made the brand a convenience store, grocer, and big box retailer at the same time (via CNN).
Customers are loving discount retailers more than ever
The work both brands have put into building and retaining the loyalty of their customer base have reaped rewards for Aldi and Dollar General. Both stores are still hiring while many industries across America shed jobs. Aldi, which is privately owned, has more than 1,900 stores in 35 states, and is poised to become America's third largest grocer after Walmart and Kroger. Investors have also rewarded Dollar General by giving its stock prices a 16 percent boost.
Customers told CNN that despite worries that the stores would be jam-packed with lines out the door, that wasn't the case. "I'm so glad I went. I was in and out in less than 30 minutes," one shopper said, noting that she tried Aldi because other supermarkets were so crowded.
As for dollar stores, industry experts say they've "likely gained from fill-in trips," meaning that consumers are using these stores to avoid the mega-chains. Whether it's bargain hunters or fill-in shoppers, chains like Aldi and Dollar General are benefiting.