Aldi's alarm remains unheard

Every Aldi connoisseur knows that Aldi Nord is heading for a fall, but the German hard discounter still does not hear the alarm bells.

 

Two separate facts tell a miserable story

Last week in the news: “Aldi Nord tests a new bread baking oven” and “Aldi's chairman resigns”. Two separate facts with a nonetheless binding relation: on the verge of his retirement, the very conservative Hartmuth Wiesemann has finally decided to test something that has been successful at Aldi Sud for ages... and that is news. Sometimes one example says more than a thousand words ever could. Observers hoped that now that Wiesemann has decided to resign early, the time has come for innovation and change.


Unfortunately, it seems their hope will be in vain. Wiesemann's successor, 45 years old Marc Heussinger, has been personally appointed by the famously conservative founder Theo Albrecht. Heussinger is known as eloquent and amicable, but in his time as store manager he has also become a good friend of the Albrecht family – and adopted its very conservative views, according to the German Lebensmittel Zeitung (LZ).

 

Reading statistics their own way

“We will continue on this path, it is going well for us”, says Heussinger in LZ – showing that a change in course is not near. Aldi Nord's managers are experts in throwing dust in their own eyes: in a recent survey on hard discount, Planet Retail's research director Matthias Queck points out that Aldi Nord's top managers use a very selective view on key statistics to prove everyone – and especially themselves – that their course is the right one.

“Certain statistics are quite good indeed”, Queck says. “Take the average turnover per store or per stock keeping unit, especially if you consider that Aldi Nord's stores have shorter opening hours”. Queck demonstrates: a 11.2 billion euro turnover divided by 2525 stores and 1060 sku equals a turnover of 4185 euro per sku per store; five times as much as competitor Edeka's hard discounter Netto, which only reaches 820 euro per store per sku. Aldi Nord also scores significantly better than international competitors, like Turkey's BIM (1965 euro) or Carrefour's Dia in Spain (875 euro). Painful detail: Aldi Süd's score in this statistic is... 6650 euro per store per sku.

 

The risks of being an every day low price retailer

In Aldi Nord's defence: these statistics do not include the real estate and coffee branches of the struggling company. Other facts however are even more worrying: for example, unlike most of its competitors, Aldi Nord does not have much room for expansion. Its network in Germany is saturated and in most of the countries Aldi Nord is active in, the chain faces the same problems. Aldi Nord also takes hard hits when competitors sell A-brand products at Aldi prices during temporary promotions, as “Aldi is an every day low price retailer”, says Queck.

Aldi Nord has been showing a few small signs of recognising the problem lately (the new oven, a more modern architecture for some new stores), but in order to really solve the problem, chairman Heussinger will have to find the courage to sound the alarm first.
 

Every Aldi connoisseur knows that Aldi Nord is heading for a fall, but the German hard discounter still does not hear the alarm bells.

 

Two separate facts tell a miserable story

Last week in the news: “Aldi Nord tests a new bread baking oven” and “Aldi's chairman resigns”. Two separate facts with a nonetheless binding relation: on the verge of his retirement, the very conservative Hartmuth Wiesemann has finally decided to test something that has been successful at Aldi Sud for ages... and that is news. Sometimes one example says more than a thousand words ever could. Observers hoped that now that Wiesemann has decided to resign early, the time has come for innovation and change.


Unfortunately, it seems their hope will be in vain. Wiesemann's successor, 45 years old Marc Heussinger, has been personally appointed by the famously conservative founder Theo Albrecht. Heussinger is known as eloquent and amicable, but in his time as store manager he has also become a good friend of the Albrecht family – and adopted its very conservative views, according to the German Lebensmittel Zeitung (LZ).

 

Reading statistics their own way

“We will continue on this path, it is going well for us”, says Heussinger in LZ – showing that a change in course is not near. Aldi Nord's managers are experts in throwing dust in their own eyes: in a recent survey on hard discount, Planet Retail's research director Matthias Queck points out that Aldi Nord's top managers use a very selective view on key statistics to prove everyone – and especially themselves – that their course is the right one.

“Certain statistics are quite good indeed”, Queck says. “Take the average turnover per store or per stock keeping unit, especially if you consider that Aldi Nord's stores have shorter opening hours”. Queck demonstrates: a 11.2 billion euro turnover divided by 2525 stores and 1060 sku equals a turnover of 4185 euro per sku per store; five times as much as competitor Edeka's hard discounter Netto, which only reaches 820 euro per store per sku. Aldi Nord also scores significantly better than international competitors, like Turkey's BIM (1965 euro) or Carrefour's Dia in Spain (875 euro). Painful detail: Aldi Süd's score in this statistic is... 6650 euro per store per sku.

 

The risks of being an every day low price retailer

In Aldi Nord's defence: these statistics do not include the real estate and coffee branches of the struggling company. Other facts however are even more worrying: for example, unlike most of its competitors, Aldi Nord does not have much room for expansion. Its network in Germany is saturated and in most of the countries Aldi Nord is active in, the chain faces the same problems. Aldi Nord also takes hard hits when competitors sell A-brand products at Aldi prices during temporary promotions, as “Aldi is an every day low price retailer”, says Queck.

Aldi Nord has been showing a few small signs of recognising the problem lately (the new oven, a more modern architecture for some new stores), but in order to really solve the problem, chairman Heussinger will have to find the courage to sound the alarm first.
 

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