At Sobel & Co. we work hard to consistently provide you with current news and retail trends, keeping our finger on the pulse of what’s happening in the retail grocery chain sector. We do this by reading industry publications, talking to owners and leaders in the industry, and keeping our eye on regulations that impact the industry.

Changes and retail trends in the world of grocery stores

Like many of you, we’ve observed the challenges in this area as the retail trends in the grocery store sector in New Jersey continues to evolve.  New stores move in and put down roots in the state.  And as a result change the landscape as they do so.  Of course the situation is much the same here as in other parts of the country.  Traditional grocery chains find themselves competing against giants like Wal-Mart and Amazon – global corporations that have aggressively penetrated the grocery/ food industry.

Discounters may drive the growth in the grocery business of the future  

Along with regional and local major grocery chains, New Jersey is now home to both Aldi and the latest newcomer, Lidl. These two have been acknowledged as the grocery sector’s ‘deep discounters,” owning that niche because of a relentless commitment to offering limited items at the prices lower than other grocers.

Let’s start with Aldi

Proud of its strong brand as a discount alternative grocery, Aldi promotes a distinctive style.   That style enables them to keep their prices below standard market levels. For more than 45 years, Aldi has been an influencer in the United States grocery business. They accomplish their goals by eliminating some of the repetitive, time consuming activities that can be costly for retailers.  Shoppers “rent” a grocery cart for a quarter and return it after shopping to retrieve their deposit.  Thus reducing the need for employees to keep corralling the carts as they do at most groceries.  

Other tactics that minimize amenities are embraced by Aldi.  All in order for them to be able to consistently maintain significantly lower prices. These include smaller stores and smaller inventories that only include essentials, fewer but more efficient employees, store hours reduced to peak traffic times, rotating ‘special’ items that appear only for a limited time, and eliminating grocery bags so shoppers have two choices: bring their own or purchase reusable bags from Aldi.

Included high on this list is the increasing importance of promoting their high quality private label brand. Aldi executive Scott Patton believes, “I think right now, the key for us is that consumers are appreciating more and more private label”.   If the trend in modern shopping shows an acceptance of private (store) brands versus major global brands, then Aldi and others will have hit the jackpot. It is a Herculean effort to disrupt the power of global branding and marketing.  But if price-savvy shoppers believe the quality is the same, many may opt for the private label goods.  And also enjoy perhaps as much as a 40% reduction on price.   

And along comes Lidl

Aldi has made a name for itself based on this bare bones approach.  However, Lidl now appeared on the scene, pushing them to defend the chain as the latest ‘lowest price’ option.

Lidl is not exactly a household word and, in fact, is pretty much unknown to most New Jerseyeans. After launching their first store in 1973 in Germany; Lidl went on to establish an international presence with stores opening in 27 European countries. But despite their four decade history, it is only this year that this international chain finally arrived in New Jersey. On November 16, 2017, Lidl celebrated a grand opening in Vineland - which represented its 45th store in the United States since June 15.  

Like its competitor Aldi, Lidl too has its own brand and its own special characteristics.

To begin, the store design maintains six aisles as compared to more than 20 aisles in a typical grocery store. What else is different? The fruit stays displayed in the boxes it ships in to preserve freshness and to increase efficiency. They bake in-store daily (including French style croissants) and customers can choose the thickness of their fresh bread slices.  All while browsing a significant selection of international products. From wild fresh fish, black angus beef from southeast United States, to a wide range of Christmas items, Lidl boasts deep bargain pricing.  A blending of private labels and efficiencies are the cornerstones of this European powerhouse.

But what they are most proud of is their culture of excellence and their consistent willingness to be adaptable. “We are always improving, we’re always getting better. If you feel like we are good today, we want to be better tomorrow,” said Lidl spokesman William Harwood when interviewed by Deborah Marko for Gannett newspaper.

The secret sauce for discount grocery success      

Minimum amenities, in-store efficiency, strategically minimized selections and the price-driven philosophy are at the foundation of the emergence of discount chains.  But it is the feistiness and innovativeness of these corporations that are capturing the attention of price-conscious shoppers. In addition, with philanthropy and community service gaining top of mind for consumers, those stores that are known for giving back to their communities will have an extra competitive edge. Aldi, for example, is gaining press coverage for offering charities and food banks access to their excess inventory on Christmas Eve. These simple acts of kindness send a powerful message – which the younger generation especially appreciates.  They want to be a part of a movement that has a measurable social impact.  

What is the prediction for the grocery landscape of the future?     

Consumer demographics are changing – and with an evolving market, retailers need to be adaptable as well.  Younger shoppers, who often populate urban areas and don’t own cars are fast becoming the target audience of today and the future.  These newly emerging young consumers shop differently and prepare meals differently than their parents did.  Often preferring small neighborhood shops over the larger, more overwhelming and difficult to navigate traditional chain stores. When proximity and size combine with convenience and reasonable prices, the local grocery store or discount store can expect to attract not only today’s shoppers (Baby Boomers and X generations).  But also expect to build a strong following with the Millennials and the ‘digital native’ generation that is coming on the scene now on the heels of their predecessors.