Shownotes
This Omni Talk Retail Fast Five segment explores Aldi’s new modular store format and why it could unlock faster expansion across the U.S.
Chris Walton and Ben Miller break down how flexibility in store design supports acquisitions, real estate strategy, and long-term growth for one of the fastest-growing grocers in the world.
⏩ Tune in for the full episode here.
#RetailNews, #Aldi, #GroceryRetail, #StoreDesign, #RetailExpansion, #RetailStrategy, #OmniTalk
This podcast uses the following third-party services for analysis:
Podcorn - https://podcorn.com/privacy
Transcripts
Aldi South Group is using its US Stores as the testing ground for a new globally unified store format developed over 14 years in partnership with Australian design firm Landini Associates.
Speaker A: rther US rollout plan through: Speaker A:Ben?
Speaker A:Yes, for those wondering, I'm sad to say, has no affiliation with the fictional law firm Bandini, Lambert and Locke from the wonderful Tom Cruise film the Firm.
Speaker A:Thank you very much.
Speaker A:Anyway, according to Chain Storage, the new design is built on a modular adaptable framework, meaning it can be scaled and reconfigured across different source sizes and building types.
Speaker A:The format is designed to create brighter, greater, some would say, some who could speak English would say greater brand consistency across all five of Aldi South's global territories.
Speaker A: in the middle of an enormous: Speaker A:The company plans to open more than 180 new stores this year, convert close to 80 former Southeastern grocer locations to the Aldi format, and reach nearly 2,800 total US stores by year end.
Speaker A: ay, on its way to a target of: Speaker A: By: Speaker A:Oh, man.
Speaker A: In: Speaker A:17 Million.
Speaker A:Ben, first question.
Speaker A:I've got two questions for you to close us out.
Speaker B:Go for it.
Speaker A:Do you think Aldi gets enough credit in the US for being the grocer that it is?
Speaker A:And second, how scared should US Grocers, and even global grocers for that matter, be with this news?
Speaker A:Wow.
Speaker B:That's.
Speaker B:Okay.
Speaker B:Wow.
Speaker B:Okay, big question.
Speaker B:Aldi is a phenomenal business.
Speaker A:Yeah.
Speaker B:And the Aldi subdivision is the most exciting, the most dynamic divisions.
Speaker B:It is years ahead of the Aldi Nord business.
Speaker B:Low price, strong quality, amazingly cash generative as a business model.
Speaker B:Very long term in its strategic thinking.
Speaker B:So I guess it's a very long way of saying if people don't recognize this and haven't given them credit by now, they're in for an increasingly rude awakening.
Speaker A:Right?
Speaker A:Yeah.
Speaker B: its very first store in April: Speaker A:Okay.
Speaker B:So not that long ago.
Speaker A:Wow.
Speaker B:Sounding old.
Speaker B:It's now grown to be one in one of the most competitive grocery markets in the world.
Speaker B:It's got over 10% market share.
Speaker B:It's got over a thousand stores.
Speaker B:And it's on track at the moment to probably take over the number three position.
Speaker B:So it looks like it's in the medium term.
Speaker B:It's going to displace asda.
Speaker B:So asda, for those who remember, was Walmart subsidiary here in the UK and it's going to replace that as the number three.
Speaker B:Look, the US store growth is equally striking.
Speaker B:So underestimate your peril.
Speaker B:Super strong business.
Speaker B:This particular story look really interesting.
Speaker B:A couple of things.
Speaker B:Landini, look, they are a globally renowned design organization.
Speaker B:They're innovative.
Speaker B:They've worked for ALI for a long time.
Speaker B:They've had a really long association with McDonald's.
Speaker B:So like all the concept McDonald's stores around the world are stores that they've created.
Speaker A:Interesting.
Speaker B:If anybody's been, if any of the listeners have been to the McDonald's in Sydney Airport, which is incredible.
Speaker B:It's a multi story.
Speaker B:It's got this incredible machine that takes food cooked from downstairs to downstairs.
Speaker B:It's like an elevator.
Speaker B:It's beautiful.
Speaker B:The.
Speaker B:They designed it.
Speaker A:Landini designed that.
Speaker B:They designed it.
Speaker A:So they get formats in modularity then that's what you're telling me.
Speaker B:Yeah, And I think that, and I know when we were chatting about this earlier, so I'm not gonna steal your thunder, the modularity element of this, that's the big, that's the bit to listen out for.
Speaker B:But I'm gonna let you cover that.
Speaker B:We'll talk about that more.
Speaker A:Well, I think I 100% agree with everything you said.
Speaker A: 're still only targeting like: Speaker A:It still seems like there's room to grow.
Speaker A:Oh, yeah, Even you agree?
Speaker A:Even more so, yeah.
Speaker A:And that's why modularity is going to be so important, because it's 100% aligned strategically to where the growth has to come from.
Speaker A:And that is through the acquisition of existing grocers regionally whose footprints aren't of the prototype design of a typical Aldi box.
Speaker B:You got it.
Speaker A:And I know that's true.
Speaker A:And here's how I know that's true.
Speaker A:The part I'll bring to the table here is I had the chance to interview all these VP of Real Estate Dan Gavin at a conference a couple years ago and he basically told us that was the fact, like that was the problem with all these acquisitions that they made is that they had to think about this because the box wasn't gonna work the way it was.
Speaker A:And so if there is that room to grow, which it's gotta, there's gotta be, you know, this is the way to do it.
Speaker A:Now the big question, though, like you said with Instagar, we don't know how much they paid, we don't know if it works, you know, we don't know that this new format is working, you know, or that it's going to continue to work.
Speaker A:You got to think that there's a high probability that it's going to.
Speaker A:Given all these track record levels.
Speaker B:Yeah, I think you would too.
Speaker B:It's been.
Speaker B:It's based on the Aldi Sud concept stores in Australia, which are really good stores.
Speaker B:I think the look, Aldi have traditionally a cookie cutter approach and that that's what drives the synergies.
Speaker B:So this modular idea that is we can put the Aldi footpr into more varied real estate is fascinating.
Speaker B:And the final thing, look, it's got me thinking about this.
Speaker B:There has been rumor and speculation for months now that Aldi Sud and Aldi Nord might finally come together.
Speaker A:Oh, wow.
Speaker B:So look very, very quick for people who are not familiar to the story, Aldi was created by the Albrecht brothers.
Speaker B:The brothers fell out.
Speaker B:One brother took the north, one brother took the south.
Speaker B:So mostly non overlapping territories.
Speaker B:This is a business that if you put the two bits together, the buying scale alone.
Speaker B:So the fact that they're building this in a modular basis, it could be about small acquisitions, but it could also be about how do we take the best performing concept in the whole group and help put it into more stores.
Speaker A:Set that up for success too, right?
Speaker A:Yeah.
Speaker B:If I had a pound for every time Aldi Nord and Aldi Sud were going to come together, as being rumored.
Speaker B:Yeah.
Speaker B:I wouldn't need to be doing this with you today, sir, despite how great it is.
Speaker B:But genuinely, I think there's been more talk now than there has been for quite some time on that.
Speaker A:Yeah.
Speaker A:But the interesting thing about this though, if you step back from it, is modularity does not generally go hand in hand with scale, you know, so there is something that you are trying to inherently crack the code on.
Speaker A:If you're going to use this in the way that we're hypothesizing that we're hypothesizing, Right, Absolutely.