Discount grocer Aldi helps trigger supermarket price war; Southern California shoppers see 3 percent drop

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CalItalian
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Discount grocer Aldi helps trigger supermarket price war; Southern California shoppers see 3 percent drop

Post by CalItalian »

http://www.ocregister.com/2017/10/23/pr ... -upheaval/

There is no possible way Aldi is doing 20-22 million per store in Southern California. Rarely do I see more than one or two checkstands open during prime afternoon hours. I go there for the immense amount of highly discounted meat that will soon have to be thrown out because it is not selling...and that's not getting any better. If you find more than a dozen customers in an Aldi at once, it is a rarity. Aldi has way fewer stores in SoCal than Fresh & Easy had, currently, before it failed.

Southern California has a lot of competition and no one store is dominant...but our grocery prices are still generally higher priced than stores - including sister chains - in neighboring states Arizona and Nevada for a variety of reasons including land values, wages, taxes and regulations (such as the California Milk Advisory Board which keeps milk products priced much higher than should be). The one area I do find Southern California much cheaper than anywhere in the USA is beer, wine and spirits. I rarely ever find a price that beats Southern California California stores in other states.
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Re: Discount grocer Aldi helps trigger supermarket price war; Southern California shoppers see 3 percent drop

Post by CalItalian »

This is such nonsense. Aldi has not started nor can it start a milk price war in California. Milk in California is highly regulated by the California Milk Advisory Board (as bad as that sham board is in my view). They set a minimum price milk can be sold at and no store can charge below it. Most stores are either at or just slightly above the lowest price set for milk.

Eggs are lower at Aldi and other stores, from time to time, have had specials that are actually lower than Aldi but it's rare. Ralphs had eggs for 88 cents, Smart & Final, with emailed coupon, 49 cents within the last few weeks. But they are nowhere near that any other week.

http://www.supermarketnews.com/news/ald ... nia-report
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Re: Discount grocer Aldi helps trigger supermarket price war; Southern California shoppers see 3 percent drop

Post by klkla »

From the article:

"Flickinger said local Aldi stores are generating $20 million to $22 million per store, per year. That compares to $12 million to $14 million for Albertsons and $17 million to $18 million at Ralphs."

So the average Aldi is doing $384,000 - $423,000 a week
The average Albertsons's is doing $230,000 - $269,000 a week
The average Ralphs is doing $326,000 - $346,000 a week

There is no way in hell that figure is even close for Aldi. Considering their small assortment and low prices they would have to have every checkstand open all day long to even get close to those numbers. Parking lots would be full. I haven't seen anything like that at their stores here in SoCal.

Also from the article:

"But to get their attention, Aldi must first flood the zone. If we throw that Aldi logo in your face enough times, you’re going to go ‘OK, I’m going to give it a shot. And that’s when we got you,” Cindel said."

Looks like Burt Flickinger and the Orange Country Register are happy to help them do that with some free publicity.
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Re: Discount grocer Aldi helps trigger supermarket price war; Southern California shoppers see 3 percent drop

Post by storewanderer »

An Albertsons or Ralphs doing $230k to $346k a week is probably at the brink of closure unless it is a very small store. In California, you cannot turn a profit on such low volumes with all of the other costs involved there being what they are.

This reminds me of when Fresh & Easy entered the market. Analysts come out with pie in the sky sales estimates that are so far off base it isn't even funny.

Scary thing is Kroger is listening to these analysts with its "Restock Kroger" initiative (which has some rehashed ideas from Larry Johnson's Albertsons of 2005). I am worried about Kroger. Luckily there are a lot of other grocers.
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Re: Discount grocer Aldi helps trigger supermarket price war; Southern California shoppers see 3 percent drop

Post by klkla »

storewanderer wrote: October 23rd, 2017, 7:25 pm An Albertsons or Ralphs doing $230k to $346k a week is probably at the brink of closure unless it is a very small store. In California, you cannot turn a profit on such low volumes with all of the other costs involved there being what they are.

This reminds me of when Fresh & Easy entered the market. Analysts come out with pie in the sky sales estimates that are so far off base it isn't even funny.

Scary thing is Kroger is listening to these analysts with its "Restock Kroger" initiative (which has some rehashed ideas from Larry Johnson's Albertsons of 2005). I am worried about Kroger. Luckily there are a lot of other grocers.
What you said about Albertson's and Ralphs is true. I would think the break even point has to start at around $350,000 a week for a traditional grocery chain in SoCal.

I agree about Kroger, as well. Their problems seem to have started when David Dillon left almost three years ago. One person can really have an effect on a large organization.
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Re: Discount grocer Aldi helps trigger supermarket price war; Southern California shoppers see 3 percent drop

Post by BillyGr »

It is hard to say, since Aldi has several things that differ from a regular store:

1. Many of their customers will have a full cart (and sometimes more than one) - you get a few people with "express" orders, but not as many as most stores would have.

2. Each cartful can be processed faster, even if there is no one else, the cashier will have an empty cart, so they can scan and put it in the cart while the customer is unloading on the other end if needed.
Less time is needed since there is no packing of items (that is up to the customer to do after paying), no processing of coupons and rarely any checking of mistakes, since they aren't changing prices constantly. Also easier ways to ring up many of an item than most stores allow any more (and they can, since there is less issue with it being wrong - most stores had that problem when the cashier rings up 12 of item x, since it might really be a couple different "styles" but not so much at Aldi as they don't have that variety).

3. Far lower costs - they may have a handful of employees in the store at any one time - one checking with a couple out stocking/straightening that can be called up as needed, maybe a couple others (if that) in the back.

Most of what has been said here (the one checkout, less people at one time and such) has been seen in their stores elsewhere, and those have been open for years so they apparently are profitable, regardless of looks - it's just a totally different model than what others use.
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Re: Discount grocer Aldi helps trigger supermarket price war; Southern California shoppers see 3 percent drop

Post by pseudo3d »

One thing I've noticed in on Aldi packages (like cereal), they have bar codes all over the box (at least three sides, though I'm not going downstairs to check) to make scanning easier. Their overheads are ridiculously low due to cutting out perishable departments and sticking to warehouse-style presentation with fast-moving SKUs.
storewanderer wrote: October 23rd, 2017, 7:25 pm An Albertsons or Ralphs doing $230k to $346k a week is probably at the brink of closure unless it is a very small store. In California, you cannot turn a profit on such low volumes with all of the other costs involved there being what they are.

This reminds me of when Fresh & Easy entered the market. Analysts come out with pie in the sky sales estimates that are so far off base it isn't even funny.

Scary thing is Kroger is listening to these analysts with its "Restock Kroger" initiative (which has some rehashed ideas from Larry Johnson's Albertsons of 2005). I am worried about Kroger. Luckily there are a lot of other grocers.
I know Larry was the one that killed many of the late 1990s market areas (which admittedly weren't doing all that well) and then squandered those savings by buying Shaw's and Bristol Farms, ultimately destroying the original company while walking off with millions, but besides that and introducing the Albertsons Preferred Savings card, I'm not familiar with what he did with the company during that era. Despite having an Albertsons fairly close by to my parents' house, we almost never went there (probably for good reason) with the rare exception of convenience food runs that Wal-Mart (next door) didn't have, or something similar. For example, getting ice cream ingredients on the way back from a road trip, since it was right on the way.
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Re: Discount grocer Aldi helps trigger supermarket price war; Southern California shoppers see 3 percent drop

Post by klkla »

BillyGr wrote: October 24th, 2017, 7:33 amMost of what has been said here (the one checkout, less people at one time and such) has been seen in their stores elsewhere, and those have been open for years so they apparently are profitable, regardless of looks - it's just a totally different model than what others use.
I don't doubt they are a profitable company. But the numbers in that article do not add up.
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