Aldi Strikes Back: A Photo Essay of Its $1.6 billion Store Refurbishment

In June 2017, Lidl opened its first stores in the U.S. Its U.S. stores have 21,000 square feet of selling space, which is twice the size of Aldi stores in the U.S. They have a distinct appearance, made of red brick with arching walls of floor-to-ceiling glazed glass.

Lidl store in Greenville, NC:

Aldi's response

On the day the first Lidl stores opened, Aldi announced it will spend $1.6 billion to remodel 1,300 of its existing stores in the U.S. The remodeling initiative is bringing a modern design to existing stores, featuring open ceilings, more natural lighting, and environmentally friendly building materials, such as recycled materials, energy-saving refrigeration, and LED lighting. None too soon! Current stores lack ambience and light and are considerably less attractive than Lidl’s US stores. 

I visited the newly remodeled store in Durham, NC to get an idea how the new Aldi store looks like. Here are my impressions.

Notice the new open ceiling with light that mimics natural light. The assortment of fresh produce has been expanded considerably. The signs on back wall mimic "natural" materials and writing:

Clear signs indicate now where you can find different product categories like snacks or salsa. Attractive signs high up the walls. The floor tiles remain drab but that is a matter of taste:

The wine section is slightly bigger and a bit more attractive but continues to be much less than Lidl offers in the U.S.:

Probably inspired by the success of Trader Joe's, the premium cheese assortment has been expanded:

A wide assortment of fresh meat:

A separate modest section of ethnic products:

Aldi has expanded its assortment of national brands to fight off Lidl. For example, below, you can see Crest, Dove, Pantene, Suave, Olay, Old Spice, Secret, Tampax, Always, and Tresemme. About half of these SKUs is new. Thus, both Unilever and P&G are heavily present in Aldi's assortment. This might be the legacy of Unilever CEO Paul Polman, who when he was P&G's president, was the first to recognize the challange posed by hard discounters, as he told me already in 2001.

Aisles are still narrow and shelf presentation austere and untidy. It is a hard discounter after all:

Checkouts: you still need to bring your own bags or buy one at Aldi. Notice the 12-pack of Coke for $4.68. While that is much below the regular price of Coke at Harris Teeter ($6.99), HT often runs a price promotion (BOGO, or even, "buy two, get three free") which brings the price way below the price at Aldi:

At the exit, reinforcement that you have made the right decision to come to Aldi. Seven years in a running is indeed impressive.

The Verdict

The new store is considerably nicer, and also slightly bigger (by reducing the warehouse section) than the old store. Its expanded assortment of perishables is also a big plus. Although in my opinion, both the exterior and the interior are less appealing than Lidl's, there is significant closing of the gap. Figures from California reveal that the new Aldi stores generate significantly higher sales per store than the old stores. Aldi stores in California are averaging volumes of about $20 million to $22 million annually, according to Supermarket News, around $6 million more than for the average "old" store in the U.S.

Author: Jan-Benedict Steenkamp, Chairman of Marketing, C. Knox Massey Distinguished Professor of Marketing, & Executive Director AiMark at UNC Kenan-Flagler Business School, and author of Private Label Strategy: How to Beat the Store Brand Challenge, among other books.