How Aldi Is Dealing With 2022's Skyrocketing Inflation
As inflation takes over headlines, Aldi continues opening more storefronts. In fact, the company has announced that throughout 2022 we can expect 150 more stores openings. This expansion will see them in Louisiana, so Aldi's presence will span across 38 states, and a massive distribution center will open in Alabama to facilitate the push into the Southeast. This puts Aldi in the running to be the third-largest grocery store chain in the U.S. in regards to the number of stores open.
To understand how certain the company must be to undertake such an expansion, you have to consider the context. The United States saw inflation rise by a whopping 7% in 2021, per NPR, making it the largest hike since 1982. Because of this jump, smaller businesses, like the Louisville-based gourmet chocolate shop Art Eatables, have no choice but to increase prices by up to 30%. When you add supply chain issues into the mix, many stores are not only forced to charge more, but this attributes to the reason there are fewer options available on shelves.
For most brands, expanding one's empire in these conditions would be inconceivable, but not for Aldi.
Aldi offers shoppers lower prices than the competition
As RetailWire points out, Aldi's business model is predicated on them being simultaneously affordable and of high quality. In fact, Jason Hart, the CEO of Aldi U.S., said as much in their press release stating, "There's a moment of surprise when [shoppers] realize just how much they can save by shopping with us." And the chairman of the International TCG Retail Summit, Chris Buecker, states that when shoppers get to an Aldi store "they will not only see that the level of goods is very competitive but also that the product quality of the private label assortment, one of the unique selling propositions of Aldi, is very high," (via Forbes).
The concept that being able to consistently offer the lowest prices for groceries has been at the core of Aldi's business plan even before the pandemic and the subsequent inflation. According to CNN, in 2019, the international grocery chain was already beating Walmart at this game. So, when faced with an environment in which shoppers cannot afford to keep up with the prices businesses feel pressured to charge, Aldi thrives as it was already resisting charging higher prices in the first place. Moreover, when inflation eases, people who have switched to Aldi are likely to stay with Aldi. After all, the company does offer a variety of foods that have developed a cult following.