Aldi says sales are booming amid inflation as even wealthier shoppers trade down

Aldi is known for its low prices and unusual cost-cutting measures.

Grace Dean/Insider

• Aldi says its US sales are rising as inflation-strapped shoppers turn to budget stores, Reuters reported.
• Customers are also switching to private labels, which make up around 90% of Aldi's product mix.
• A vice-president said the German discount chain had seen a rise in middle- and high-income shoppers.

German discount-grocery giant Aldi says that its US sales are benefiting from soaring inflation, Reuters reported.

Same-store sales have risen in the double digits over the past year, Scott Patton, Aldi US' vice-president of national buying, said at a media event Wednesday, per Reuters.

"Inflation is hitting everyone so when we can be a solution for the grocery portion of that, that's important," the publication reported him as saying.

Aldi is known for its low prices, which are possible because of the range of unusual cost-cutting measures it deploys. The chain sells products straight out of the crates they're delivered in and uses a rental cart system to incentivize customers to return their own shopping carts rather than paying for staff to do this.

Patton said that one million new customers have started shopping at Aldi over the past year, including a rise in middle- and high-income shoppers.

Aldi isn't the only grocery store to get a new stream of customers thanks to soaring inflation.

Dollar Tree and Dollar General, which reported higher sales and profits in the most recent quarter, both said they're getting more high-income consumers, including some on six-figure salaries.

Overall, US prices have grown 8.3% over the past year, per data from the Bureau of Labor Statistics. But groceries are getting more expensive at a much more rapid rate, growing 13.5% over the same time period, the data shows.

Some products, including eggs, butter, and cooking oil, have been much harder hit than others.

Customers are trading down by switching to grocery-store private labels — both because of inflation and because shoppers are increasingly brand agnostic. Around 90% of Aldi's products on sale in the US are own brand, and the grocer typically just offers one or two leading big-name brands for each product category.

Fresh produce makes up two-thirds of Aldi's sales

Patton said that fresh produce now makes up around two-thirds of sales after Aldi ramped up its offering over the past two years. Fruit and vegetable prices are between 20% and 40% lower than at competitors, he said, which he attributed to Aldi's efforts to streamline labor and the fact that it only offers around 120 types of products on average per store.

Aldi has more than 10,000 stores globally, with its biggest footprints in Germany and the US, where it has 2,200 stores. Around half of these opened over the past decade.

JLL has listed Aldi as the fastest-growing grocer in the US for the past three years. In 2021 it added 88 new stores totaling around 2.2 million square feet to its portfolio, and is now the third-largest grocery retailer in the US by store count after Kroger and Walmart, JLL said.

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