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A Lean Grocer For Lean Times

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By MICHAEL SASSO

The Tampa Tribune

Published: August 27, 2008

PINELLAS PARK - With Florida likely in a recession, now might seem like an awful time to debut an unknown grocery store in the state.

But the German grocery chain Aldi - which claims it can beat mainstream supermarkets' prices by 40 percent - may benefit from all the glum economic news. Some shoppers are starting to trade down from traditional supermarkets such as Publix and Sweetbay in favor of deep discount, or what are called extreme-value stores, such as Aldi, Save-A-Lot and Wal-Mart, market research firm TNS Retail Forward said.

Aldi plans to open 10 stores in the Bay area between Sept. 25 and Nov. 10.

A tour Monday of one of the stores opening soon, at 9021 U.S. 19 N. in Pinellas Park, showed Aldi has some of the flair of full-size supermarkets, with brightly lit stores, cream and clay-colored floor tiles, and colorful wall graphics of oranges, eggs and cheeses. Aldi stores are about 10,000 square feet, compared with traditional supermarkets, which average 40,000 square feet.

However, the company makes no apologies for skipping some of the bells and whistles that bigger supermarkets have, stressing that forgoing some features allows it to charge lower prices.

Some differences from traditional grocery chains: Aldi customers pay 25 cents to rent shopping carts; shoppers bag their own groceries; and stores have limited operating hours, typically open from 9 a.m. to 8 p.m. Monday to Saturday and 10 a.m. to 6 p.m. Sunday.

All of this is intended to cut operational costs and save customers money, said David Behm, Aldi's vice president for the Central Florida region. Stores operate with a total staff of just 15 people, of which 12 are cashiers and three are managers. Cashiers also stock shelves. By comparison, the smallest Publix stores operate with about 110 employees, a Publix spokeswoman said.

Where the average supermarket carries 50,000 sizes and varieties of products, a typical Aldi will carry 1,300.

Mainstream supermarkets "might have a 5-foot section for ketchup, where we have a foot," said Aldi's director of operations, Matt Cradick.

Of its products, 90 percent are private-label products, meaning Aldi owns the brand. Its private-label brands include Millville for granola and breakfast bars and Belmont for cookies.

Unlike most grocery stores, Aldi doesn't appear to be fearful of Wal-Mart, which has grown rapidly in the grocery business. The new U.S. 19 Aldi store in Pinellas Park, which opens in November, is about a half-mile from a busy Wal-Mart Supercenter, too close for comfort for many supermarkets.

However, Behm said Aldi can beat Wal-Mart prices. The store on Monday's visit didn't have prices on its products, so it wasn't possible to compare prices. One item Behm did share the price of was a 16-ounce box of Kid's Krunch cereal, similar to Quaker Oats' Cap'n Crunch. The Aldi product sells for $1.89.

Aldi is perhaps most comparable to Save-A-Lot, another retailer that offers a limited selection of food. However, Aldi draws from a slightly broader customer base than Save-A-Lot, which appeals more to low-income consumers, Behm said. Aldi targets customers with a household income between $35,000 and $100,000.

It's not clear how Aldi or Save-A-Lot are doing financially. Aldi is a private company owned by Aldi Group of Essen, Germany, and doesn't release financial details. Save-A-Lot is owned by publicly traded Supervalu of Minneapolis, which doesn't break out Save-A-Lot's sales figures.

However, both companies should be benefiting from Florida's economic slump and food inflation, which is near 6 percent, according to TNS Retail Forward. Its July survey shows 20 percent of shoppers nationwide are changing where they shop for groceries because of inflation. Among low-income shoppers, that figure is higher - 25 percent.

"As shoppers look toward trading down, Wal-Mart, dollar stores and other small-format value retailers (e.g., Save-A-Lot, Aldi) are gaining shopping occasions at the expense of other retailers," the research firm said in its July survey note.

ALDI ON THE WAY

Locations and opening dates of new Bay area stores:

SEPT. 25

•820 E. Brandon Blvd., Brandon

•4745 U.S. 98 N., Lakeland

•6700 66th St., Pinellas Park

•13514 University Plaza, Tampa

•8521 Hillsborough Ave., Tampa

OCT. 27

•24756 U.S. 19 N., Clearwater

•1177 N. Missouri Ave., Largo

•2900 34th St. S., St. Petersburg

NOV. 10

•9021 U.S. 19 N., Pinellas Park

•3021 James L. Redman Parkway, Plant City

Reporter Michael Sasso can be reached at msasso@tampatrib.com or (813) 259-7865.

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