I always thought my grocery shopping patterns were a little crazy. There were certain items I bought in bulk at Costco, other items at a grocery store, fish at Santa Monica Seafood, and the list goes on.
It turns out my shopping habits are not entirely unique. Amazon, with their purchase of Whole Foods, acknowledged the multi-venue trend in grocery shopping. The purchase of Whole Foods was their bet on omni-channel offerings – online and brick and mortar.
Aldi, a deep discount grocery chain from Germany has proven that a different trend is also still alive and well in America – cross shopping. That is the practice of comparing prices on different items and then purchasing them at different locations. While we usually think of cross-shopping for larger one-time purchases, with groceries, it is the practice of performing this analysis on the same items on a regular basis. That’s right – Aldi placed a big bet that consumers would add them to their regular shopping list as an additional cross-shopping alternative to their regular grocery store.
With stores in 35 states, 90% of all products sold by Aldi are attractive private label brands created with the same attention to branding that one sees from CPG companies at prices 15% to 20% cheaper than national brands.
Aldi also bet heavily on another trend called consumer advocacy. This is a specialized form of customer service in which companies focus on what is deemed to be best for the customer. It is a change in a company’s culture that encompasses all aspects of customer contact, including products, services, sales and complaints. It can include product offerings that better meet a customer’s needs but have less than usual profit margins or service practices that cost more money but make the customer happier.
Their 2019 consumer advocacy “Net Promoter” score of 55 places them in the top three grocers nationwide. By comparison, Costco’s score is 45, supermarkets average just under 40, and it’s less than 30 for mass merchants. “Promoter” consumers are fans of a particular brand and make purchases more often, spend more and show a higher degree of loyalty.
The net result – with 1800 stores in the United States, as many as 30% of shoppers at mass and traditional grocery stores now also shop at Aldi as well as Lidl, a much smaller German deep-discounter with approximately 150 stores.
Need more proof? In Great Britain, large grocers Tesco and Sainsbury’s business practices read like a classic example of business hubris and resistance to change. Ten years ago, Aldi’s market share was significantly less in Great Britain than it is in the United States today. Now, nearly two-thirds of all households in Great Britain now visit an Aldi or Lidl store at least once every 12 weeks.
So, what trends are your business ignoring or resisting?