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.