Supermarket News had the opportunity to speak with Aldi CEO Jason Hart, and one thing stood out during the Q&A: Aldi’s move to acquire 400 Winn-Dixie and Harveys Supermarket stores was a power move in the Southeast territory.
The Batavia, Ill.-based retailer is now in position to be a major player in the grocery market industry, but there are still hurdles to clear. The deal still needs to receive regulatory approval and transitioning hundreds of stores is not going to be an easy task. Hart does hint that a majority of the stores acquired will be converted to the Aldi layout.
Aldi now appears as confident as ever and aims to make an impact.
Supermarket News: Why now? What opportunity was Aldi seeing in this deal? What was the timeline leading up to this decision?
Jason Hart: The fact is that Aldi has been on a strong growth trajectory, opening about 100 stores per year for the past decade. The acquisition of Winn-Dixie and Harveys Supermarket is a natural extension of that growth in the Southeast, a region where we have deepened our presence. In fact, earlier this year, we opened our 26th distribution center in Loxley, Ala., to better serve surrounding stores and states.
Through this acquisition, Aldi will be better positioned to help more people save on their grocery bills in a part of the country that’s been an excellent market for us. With increased customer demand for Aldi in the Southeast region, we have a meaningful opportunity for Aldi to naturally fill the gap for great products at the lowest possible prices during a time when they need it most. Ultimately, this acquisition provides Aldi speed-to-market with quality retail locations, great people and a solid core business. It brings us closer to our customers to deliver even more convenience and value.
SN: Will Aldi likely convert all or most of the stores to Aldi? What’s the plan there? Will Aldi experiment with store format? What could a more conventional supermarket with a larger format look like?
JH: For now, nothing changes, and it will be business as usual for each of the banners. As we shared in our announcement, Aldi is evaluating which Winn-Dixie and Harveys Supermarket stores will convert to the Aldi format.
We’re focused on growing ALDI and intend for a meaningful amount of Winn-Dixie and Harveys Supermarket stores to continue operating under their respective banners after the transaction closes in the first half of 2024. These are trusted brands that have done an excellent job serving their communities and customers over many decades and we see these brands continuing to have value into the future.
For the stores we do convert, we’re committed to making the process a positive and seamless one for everyone involved. Aldi completes a high volume of store openings and remodels year after year, positioning us well for a smooth transition.
This is an exciting opportunity to meet the call for more Aldi locations across the region, introduce ourselves to new shoppers and prove to Southeastern communities they can rely on us for savings up to 40% off their grocery bills.
SN: With the looming Kroger, Albertsons merger, we’re hearing “consolidation, consolidation, consolidation.” How much was Aldi’s acquisition of Winn-Dixie and Harveys Supermarkets driven by the consequences of the potential Kroger, Albertsons deal?
JH: The acquisition builds on this strategy and is fueled by customer demand for Aldi stores in their communities. When I visit stores, the most common question I hear is, “When are you going to open more stores closer to where I live?” Customers know that when Aldi comes to town, they can save time and money on every trip.
With food prices remaining high and stretching consumers’ budgets, people can count on Aldi for quality, affordable groceries and a simple, easy-to-shop store layout.
We see this acquisition as a tremendous opportunity to meet this demand by opening more stores in the Southeast in addition to the more than 335 stores already in the region with 20 more to open by year’s end.
SN: What are some of the challenges Aldi will face with the Winn-Dixie, Harveys acquisition?
JH: Aldi has a strong track record of opening and remodeling stores across the country each year, so we’re confident we can make this a smooth transition. In the early days, there won’t be any immediate changes and Aldi will remain focused on doing what we do best: Delivering great products at the lowest possible prices.
We have great respect for the Southeastern Grocers brand and leadership team, and we look forward to working closely to ensure we are providing excellent service to our customers so we can best serve these communities in the years to come.
SN: Aldi’s growth plan already included 2,400 U.S. stores by the end of this year, before this transaction; now adding these 400 stores will put the company at 2,800 U.S. stores; more than any of Kroger, Albertsons, Ahold Delhaize, Publix or HEB. What does this amped up growth say about Aldi’s plan to position itself within the market?
JH: Aldi is one of America’s fastest-growing retailers because shoppers are looking for a different grocery experience that consistently delivers on quality, affordable groceries, and a curated selection. We’re able to offer great products at the best prices because of the things we do differently. From our smaller store formats, which are easier to shop and operate, to our quarter cart system, and stocking our shelves with 90% Aldi exclusive products, everything we do helps shoppers save money. In fact, our basket of groceries is 40% less than traditional grocery stores, and 15% less than the big-box discounters.
That resonates with consumers because no one wants to pay more for groceries than they have to. When customers shop Aldi for the first time, they quickly discover they don’t need to sacrifice quality to meet their budgets. With this acquisition, we can champion value in more communities across the Southeast, a region we’ve been expanding in given population growth and consumer demand for Aldi.
SN: Any future Aldi rollouts we can expect…perhaps involving technology, store layout, etc.?
JH: We’re always putting our customers first. Our focus will always be on how we can offer the best products at the lowest prices in the market.
As we find new ways to make our operations more efficient, like investing in electronic shelf labels to help save on paper and resources, we’ll continue to evaluate changes to further cut costs and pass on savings to our shoppers. It’s why we’re one of America’s fastest-growing retailers.
SN: What is the timeframe for this acquisition…when do you expect it to be complete in terms of which stores will be Aldi and which stores will be left alone?
JH: The transaction is expected to close in the first half of 2024, subject to regulatory approval and other standard closing conditions.
In terms of stores, we are working through all those details and will be very thoughtful and purposeful on that. We’ll convert a significant amount to the Aldi format after the deal is approved, over the course of several years. However, a meaningful amount of Winne-Dixie and Harveys Supermarket stores will continue to operate under their respective banners.
SN: Can you discuss any other terms of the acquisition, like price?
JH: I can’t go into the financials of the deal but what I can tell you is we’re excited to continue our growth in the Southeast to bring affordable groceries to more communities when they need it most.
SN: Will Aldi be stepping into the traditional supermarket format with this acquisition?
JH: Our unique business model is what’s driving consumer demand for Aldi and helping make us one of the fastest-growing retailers in the country. We’ll continue to focus on offering a simple approach to retail that saves customers time and money.
With smaller format stores and a carefully selected range of products, Aldi operates its stores more efficiently to cut costs and pass on savings to customers.
Our curated selection removes the frustrating guesswork from grocery shopping and allows customers to get in, get out, and get on with their days. In fact, our smaller, simpler stores turn out more volume and sales than many of our competitors. You’d be amazed at how much of your grocery shopping you can get done in a typical 20,000-square-foot Aldi store.