No matter their small selections and the near absence of brands you’d recognize: Trader Joe’s and Aldi are winning top honors in consumer surveys and proving to be enormously influential in the supermarket business.
A new study from Market Force Information asked 6,600 American consumers to name their favorite supermarkets in terms of categories like convenience, price, quality of meat and produce, courteous staff and variety of merchandise. The contenders included all the big names in supersize grocery chains, including Safeway, Giant Food, Stop & Shop, Publix, Whole Foods and Walmart, but the overall favorite store named by consumers was a small retailer with a neighborhood-market feel and very few national brands: Trader Joe’s.
“When asked to rate their satisfaction with their most recent grocery-store experience and their likelihood to refer that grocer, consumers scored Trader Joe’s above all others,” the study states. “Publix, Whole Foods, Wegmans and Aldi also ranked high” with consumers. Walmart, on the other hand, ranked at the very bottom of Market Force’s “customer-delight index,” which combines shoppers’ overall satisfaction with the likelihood they’d recommend the grocer to others.
Trader Joe’s received top ranking in the survey categories for inviting atmosphere and fast checkout, and it also scored high for having a courteous staff, cleanliness, accurate pricing, nutritional information, natural and organic options, and overall merchandise selection. In a discussion at Retail Wire about why Trader Joe’s came out on top in the survey, one retail expert commented:
Trader Joe’s secret is not just about accurate pricing and fast checkout. It really comes down to the small formats, well-edited assortments and value pricing of unique private-brand products. Not all that different from what drives TJ’s sister company Aldi, when you think about it.
Speaking of Aldi, which along with Trader Joe’s is owned by Germany’s Albrecht family, consumers named it as the top-ranked grocer for low prices in the poll. Both Aldi and Trader Joe’s may be small in terms of the physical sizes of their stores, but they obviously please their customers — and they seem to be proving themselves as big trendsetters in the supermarket business.
Both sister supermarkets have been expanding rapidly in recent years. Aldi, for instance, opened nine stores in Houston last spring, and in a recent press release announcing a major expansion to Southern California, the company noted it’s been adding an average of 80 new stores every year. Aldi’s business model is based on low prices, which it achieves by practices such as stocking fewer items, eschewing national brands for cheaper generic labels and not accepting credit cards. Unlike other discount stores, however, Aldi locations are exceptionally clean and well organized — so the shopping experience doesn’t come off as second rate.
“They try to be the lowest price in the market,” BB&T Capital Markets analyst Andrew P. Wolf said, describing Aldi to the Los Angeles Times. “If you took a Trader Joe’s and made it more for Walmart customers, that’s what Aldi is, like a dollar store for food.”
As a 2010 Fortune story on Trader Joe’s pointed out, many Trader Joe’s trademarks have become major trends throughout the grocery field. Think: good selections of organic and natural products, a constantly changing roster of tempting “affordable luxury” goods and loads of in-house (generic) store brands.
Aldi appears to be worthy of copying as well. Transplanting a retail brand that’s successful overseas into the U.S. is not easy. Tesco, Britain’s largest grocery company, failed in spectacular fashion when it tried to launch the Fresh & Easy brand throughout the western U.S. Aldi, on the other hand, which has won the U.K.’s Best Supermarket award, sponsored by the consumer watchdog Which? Group, two years in a row, has been enjoying success in the U.S. to the extent that other foreign grocers now plan on following in its footsteps.
Lidl, a German-based discount grocery chain with 10,000 stores in Europe, is likely to expand into the U.S. market by 2015, according to Supermarket News. Matthias Queck, a retail consultant for London’s Planet Retail, reported that Lidl executives have been exploring a shift to the U.S., that the decision to expand has probably already been made, and that the company will use a “copycat” strategy in the U.S., patterning its growth on what Aldi has done. “The retailer would take a similar path to Aldi, locating first in strip shopping centers nearby larger retailers, before pursuing stand-alone boxes and stores offering additional brands and services,” Supermarket News reported. Queck “said its U.S. strategy would be ‘Aldi-plus and see what happens.’”