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May 20, 2020

CEO: Food Price Inflation Won't Change Aldi's' Formula


SN: "Following news of historical U.S. food price increases, Aldi CEO Jason Hart has pledged to hold the line on savings for shoppers.In a letter to Aldi customers yesterday, Hart said the hard-discount supermarket chain won’t veer from its focus on providing everyday low prices for groceries, despite industrywide supply-chain challenges amid the coronavirus pandemic. “While just about every aspect of our lives might look a little different now, including grocery shopping, I want to assure you that one thing will never change at Aldi: our commitment to offering you the lowest prices, every day,” Hart stated in the letter. “We know you love Aldi for our great prices, and those prices aren’t going anywhere, no matter what.” Last week, the U.S. Bureau of Labor Statistics reported that the Consumer Price Index for food edged up 1.5% month-to-month for April, compared with a 0.3% uptick in March, and was up 3.5% YoY. Larger increases came in the food-at-home CPI, which rose 2.6% month-to-month in April — the largest monthly uptick since February 1974. The gain was 0.5% in March. Year over year, food-at-home pricing climbed 4.1% for April. For food-at-home, all six major grocery food group price indexes climbed YoY in April, BLS reported. Price hikes ranged from 0.4% for fruit and vegetables to 6.8% for meat, poultry, fish and eggs. At the upper end of the increases were dairy, up 5.2% versus a year ago, and nonalcoholic beverages, up 5%... Aldi U.S. stands well-positioned as the COVID-19 crisis heightens consumers’ financial and health concerns. The retailer offers a curated selection of high-quality private-label products — about 90% of its mix — with everyday low prices and a simplified shopping experience that enables customers to get in and out of the store quickly.In its April COVID-19 Commerce Snapshot, which polled 2,000 U.S. consumers, Kantar found that 34% expect to try a new retailer to get the products they want and to adjust their shopping budget. Of those shoppers, 12% cited Aldi as a new retailer they plan to shop. And Aldi’s focus on private brands also bodes well for the chain: For the 10 weeks through May 9, private-label in-store CPG sales are up 27.1%, Nielsen reported. Aldi says its retail model, along with fast inventory turns and extremely efficient store operations, helps the company keep its prices down"...

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