Siddharth Kavale
NEW YORK (Reuters) – The U.S. unit of German discount supermarket chain Aldi on Monday urged its suppliers to cut costs, increase production of products such as cheese, move operations closer to stores and focus on sustainability to improve the chain’s competitiveness. against rivals.
At its first US Supplier Summit, Aldi US called on suppliers to ensure timely and complete product deliveries, while highlighting ramping up production in the North and South East regions, where the Aldi Sud-owned supermarket chain is undergoing significant expansion.
In return, Aldi promised to support suppliers by helping to set up additional production lines or facilities, entering into longer-term supply contracts and working together to grow the business.
WHY IS IT IMPORTANT
More than 90% of the products sold by Aldi are private label, putting the supermarket chain in intense competition with rival grocers expanding their own private label food brands.
Due to ongoing inflation, Americans are switching to less expensive private label products instead of expensive national brands.
CONTEXT
Walmart (NYSE:) last week unveiled a private-label grocery line of 300 items, 70% of which cost less than $5.
Kroger (NYSE:) said in March it plans to add more than 800 items to its “Our Brands” private label products, and Target is adding hundreds of new items to its “Favorite Day” and “Good & Gather” private label products. food brands.
KEY QUOTES
“You, our suppliers, are our unsung heroes,” said Joanne Cavanaugh, vice president of national purchasing at Aldi.
“I cannot overemphasize the importance of cutting costs,” said Scott Patton, vice president of national purchasing at Aldi.
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IN NUMBERS
Aldi will open 800 stores by the end of 2028, mostly in the northern and southeastern United States, after it bought Southeastern Grocers, the parent company of Winn-Dixie and Harveys Supermarket.
Aldi’s private grocery brand household penetration in the first quarter of 2024 is expected to be 43.7%, versus Target’s 40.3% for Good and Gather and over 50% for Walmart, according to Numerator.