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Never Underestimate the Power of Your “Little Enemies”: Wal-Mart and Whole Foods Learned that lesson Big Time as Their Stocks dropped Last Quarter



Aldi's, a successful discount supermarket chain, has been around for a long time and with multiple locations throughout the country. Since they opened their doors in 1910, not too much has changed for the company other than growth and more revenue. The company recently announced their plans to expand their organic food department, by adding more gluten-free foods, organic food brands, and get rid of some artificial ingredients from their products in an attempt to attract more consumers who want shop for healthy alternatives.

Consumers love going to Aldi's because of their competitive low prices, in direct competition with other big chains like Wal-Mart. According to a recent price check, Aldi's products are about 30% cheaper than Wal-Mart's. Another company that Aldi's may be a threat to is 365 by Whole Foods Market, which is expected to open later this year.

Whole Foods understands that if they are going to make such a change, now is as great of a time as any. The company has already started to get rid of partially dehydrogenated oil, synthetic colors, and MSG's from all of their private-label products — which accounts for about 90% of their total revenue.

Aldi is also planning on expanding a selection of organic meats, including their “Never Any” brand which has no added hormones, animal by-products, antibiotics, or other additives. Their SimplyNature line, which is completely free of over 125 ingredients, will also see more products, since it’s already so popular. Their dairy section will also see more products, with products such as sour cream, cottage cheese and yogurt.

The company is truly taking the “go big or go home” saying quite seriously since they began to offer “fancier” or higher classed foods like quinoa, coconut oil, and smoked salmon. All of these little yet big changes will enable the company to not only go head to head with Whole Foods, but Kroger’s. They too have started to step up and expand their organic product line, Simple Truth.

Altogether, Aldi's has over 1,500 stores based in the US, but they plan on increasing it to 2,000 over the next two years as a part of a $3 billion expansion.

Both Aldi's and their company's foreign rival discounter, Lidl, has started to seize the grocery market in a similar fashion in the United Kingdom. The pair is forcing a lot of the nation's biggest supermarkets to reduce their prices dramatically and cut off many employees in an attempt to remain in the game and stay relevant in the competition for customers. Andy Clarke, CEO of Asda, UK’s second biggest grocery chain, called this new game of fresh competition, created by Lidl and Aldi's, “the worst storm in the history of retail.” It was not too long after Aldo and Lidl joined forces that the Wal-Mart owned company reported its worst drop in sales for the quarter to ever occur.

Aldi's believes that keeping all their products at an affordable and low price is the best edge they have. They can keep their prices so low by limited inventory to a lean selection of private-label items. They do the opposite from the traditional supermarkets which tend to carry a multitude of brands, even on just a single product. Aldi's also invests far less in both merchandising and customer service compared to their counterparts. A lot of Aldi's products are displayed in their shipping cartons as a way to make restocking simpler and more efficient. Doing that translates as fewer workers those companies needed on the sales floor. Aldi's also asks that their customers bring their own shopping bags with them and bag their own products, further reducing need for more staff.

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