With food price inflation up 8.4% over a year ago, two of the largest budget-priced grocery store chains are doubling down on taking care of food shoppers tired of high prices for things like beverages, cereal, and eggs.
Aldi has announced that it’s adding 120 more stores before the end of 2023, moving it past the 2,400 mark, making it only 300 shy of Kroger’s footprint and about 200 more than the number of Albertsons locations.
The company has the wind at its back, too. Aldi made fast friends with 9.4 million new shoppers last year and experienced double-digit growth with impressive in-roads with suburbanites and baby boomers.
Another budget-focused grocery chain making news is Save A Lot. A new plan to guide customers toward deeper savings is being rolled out at the company's locations across 604 cities.
"Shop the Dot" is a three-pronged program designed to highlight regular price drops and other discounts. Customers will be able to see where the best deals are in each store by looking for the whimsical "Lot Dot" that's part of the chain's logo. Save A Lot's Lot Dot prices are valid anywhere from 30 to 90 days, compared to traditional grocery store ads.
Clear growth for budget-focused grocery stores
ConsumerAffairs contacted Placer.ai, a location analytics firm whose research tracks store traffic among other metrics, to find out if its researchers are noticing any changes in traffic between regular-priced retailers and budget stores.
“There is a clear growth trend for Aldi and Lidl, a testament both to the appetite for the unique offering they provide, the strategic nature of their expansions and the opportunity presented by the wider economic situation,” Ethan Chernofsky, senior vice president of marketing at Placer.ai, said.
Private-label brands continue to capture more grocery dollars
Some of that migration – particularly to Aldi and WalMart – is coming from private-label brands. About 90% of all the items Aldi sells are its own brands and account for 77.5% of the company’s sales. When it comes to household penetration, Walmart leads everyone with four of the top five private-label brands.
But, it’s not an Aldi- or WalMart-only thing. Consumers continue to favor private labels over premium, name-brand versions. In Q1 2023, there were double-digit sales increases and greater market share in both dollars and units on store brands. Store brands continue to far outperform national brands in sales, too. Across all U.S. grocery channels, store brand dollar volume is up nearly twice over national brands.
What are the best private-label bets for consumers? Going by the most recent sales figures Circana tracks for Private Label Manufacturers Association (PLMA), 15 saw increased store brand dollar sales during the first quarter.
Double-digit gainers were Beverages (up 17.1%), Bakery (+16.8%), General Food (+16%), Refrigerated (+15.5%), Floral (+13.1%), Deli Prepared (+12.4%) and Health Care (+10%). The only two private-label categories that slipped a bit were Tobacco (off 11.8%) and Meat (down 1.6%).