Why ALDI's Success Hinges on Obsession With Quality and Value
ALDI’s success – and there has been a lot of it over the past few years – hinges on its stated goals to obsess on quality, innovate and excite, control costs, not play games and keep shoppers at the center. The retailer’s impressive growth trajectory is set to continue, as its leaders have set ambitious goals including opening 800 new stores and investing $9 billion in the business over the next five years.
During a keynote breakfast session at the Private Label Manufacturers Association (PLMA) annual trade show held Nov. 17-19 in Chicago, ALDI USA President Dave Rinaldo talked about the company’s guiding principles, its remarkable inroads and how retailers can partner with manufacturers to keep the private label momentum going.
Following his presentation, Progressive Grocer sat down with Rinaldo, a 25-year company veteran, to gain more insights on the retailer’s past, present and future and how its value proposition resonates with shoppers across all demographics and fluctuating macroeconomic conditions.
Progressive Grocer: You started your career as a district manager trainee and held a variety of roles during your career. How do you carry those roles with you, as a guiding perspective, when you are making decisions?
Dave Rinaldo: To me, the foundational principles of what we do and how we run our business – being intentional about how we create value day in and day out for our customers – and the juxtaposition of how much we've evolved while still holding true to those principles, is one of the things that I'm most proud of in my role for the time that I've been with ALDI. To see that those values still translate and resonate with customers to this day is a pretty amazing thing.
PG: I love the story you shared about the one of the first times you went to an ALDI store when you were in college. Imagine if you were able to flash forward 25 years and learn that 25% of people would be ALDI customers in 2024. It’s remarkable.
DR: I still have moments where I say I can't believe we are now where we are. At the same time, as a company, we don't stop much to pat ourselves on the back because we have a lot of work to do. We know that we can never stop investing in running the most extraordinarily efficient operation that we can and providing the best value for customers. The strength of that drive is that it doesn't allow us to get distracted.
PG: ALDI also proves that you can marry discovery and simplicity at the same time.
DR: For sure. The ability to excite customers is a big part of this. And that's where you see items like our charcuterie range or our organic produce that have really unlocked the magic and the level of customer engagement. People come out with items that they didn't know that they were coming in for, with great value on a premium item or specialty item, especially at a time like this. That's what really is I think driving the business in a way – the ability to excite our customers.
PG: How are your team members instrumental in ALDI’s ability to resonate with today’s shoppers?
DR: We've always been a company that's believed in paying industry leading wages. But we want to empower our teams to make decisions to drive our business forward. We retain people disproportionate to the industry. And there are many, many people like me who have spent decades in this organization.
That's where I think about the foundational principles and how we carry that forward in 2024 and beyond. Having that retention and having people understand where the business has come from is a tremendously valuable thing. It's as important now in 2024 as it ever has been. I'm lucky to work for an organization that embraces that to the degree that we do. It's a very powerful dynamic in our business.
PG: Looking ahead past 2024, is now – or why is now – the right time for ALDI and its teams to scale to get to the next level?
DR: ALDI has grown in the best of economic times, and ALDI has grown in the face of challenging economic times. I've seen that over the course of 25 years.
What we've seen is when economic pressures subside, and you've delivered that value for customers, is that the customer stays with you. Certainly, in the last couple of years, more people have given private label a first or a second try.
We've had strong performance over the course the last couple of years, but I don't think it's as much "right place, right time." I just think that we've brought more people into the private label space and our history would tell us that we're going to be able to keep them, but we need to continue to work to deliver the value. We can't take that for granted.
PG: Progressive Grocer recently welcomed ALDI sustainability manager Jason Schultz at our Grocery Impact event, where he talked about ALDI's efforts to give back to communities, including the Alex's Lemonade Stand Foundation (ALSF) and hurricane relief efforts. As ALDI has grown its footprint, how would you describe efforts to grow the culture of caring, too?
DR: ALSF has unlocked something in our employee base and our teams that we've rallied around. There's been an energy and an engagement and ALSF has done that for us. And we have other really important philanthropic partners too.
I think that in 2024, as an organization, you need to give your employees the ability to engage in who you are, what you stand for. The response has been incredible from our employees.
PG: Do you think part of that, too, is the nature of this business, in that you provide sustenance – you provide food and everyday goods for people?
DR: I think we're a very humble culture, and I think providing value for Americans is truly important to us. We find purpose in that.
Our views on making the planet a better place and taking care of its people is an important thing and it matters for our customers. We know that that matters for our employees, too.
PG: Did the explosion of the private label business surprise you at all?
DR: In a sense, I'd say it didn't surprise me because I've seen this journey for 25 years and I've seen us grow year after year after year. Certainly, the pace of our growth and the pace of our success has continued to increase. So that's changed. But we've been a part of the journey for a long time and what we do, it's a core competency of ALDI – it's our offer. We've been driving hard, making things high quality and affordable, but also offering exciting items that our customers are excited about.
[RELATED: Retailers, Suppliers Bullish on Future Private Label Growth]
PG: And your suppliers come right with you on this journey.
DR: That was one of the benefits of being here today at PLMA – to speak to our supply base in totality as a collective and discuss what our hopes and ambitions are and the critical role that they play for their business.
PG: I imagine you have some suppliers who have been there since day one.
DR: We have suppliers that we've been working with for decades and decades. That's something that we take a lot of pride in and those are important partnerships to us and we want them to continue to grow with us. We also know that we'll have to bring in new suppliers to continue with the scale and the growth.
PG: Do you get to sample products, too, as ALDI discovers new suppliers?
DR: We are in the sampling kitchens all the time. That's the obsessive focus on quality. And we've understood for a long time that if you don't get that part of it, the rest of it's a pretty hollow proposition.
PG: I’m sure it's fun to bring forward artisan brands, because those entrepreneurs have such a passion behind their products.
DR: Absolutely. The supply base is so critical for us when it comes to innovation. Innovation is critical in all categories, especially when we talk about private label.
PG: And doing all that while aiming to being the most sustainable grocer in the country.
DR: On a personal level, I take such pride in working for an organization where sustainability is at the center of the purpose of the organization. It unlocks such appreciation and engagement from our teams. Our commitment to being one of the world's first grocers to commit to validated net zero emissions by 2050 is something that I'm tremendously prideful to work for in an organization.”
PG: Finally, this may be tough, but what are some products that are always in your own cart?
DR: The team has joked with me that there's one item – snickerdoodle almonds – that comes up whenever we talk about this. They were the best thing I've ever had.
We also have a fall range and a Christmas range with so many unbelievable items that we put out. We love doing the charcuterie spread at our house and getting the ALDI wine – it's something that we do with our friends. There are so many items throughout the year, and especially, right, now, the breadth of interesting, unique and good items in the store is awesome.
