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00:00I do want to talk about those additions, Dave, and particularly with the number of stores that
00:04you're seeking to open, 180 stores, I believe, this year alone. Give me a sense as to how
00:11much further you can continue that pace of new openings.
00:15Well, first of all, thanks for having me on. I'm excited to talk a little bit about the Aldi
00:18journey and the growth that you mentioned. It's a real interesting time for us here at Aldi,
00:23and that now one in three Americans are shopping at Aldi. I've been at the business for 26 years,
00:29and if you had told me 26 years ago we would be here, I never would have believed you.
00:33But we also know that Americans are really feeling the pressure of what is years of cumulative
00:39compounding inflation. And so there certainly is a demand right now where Americans are looking
00:44for different alternatives to many things, and certainly where they buy their groceries
00:48is one of them. The interesting thing that also comes at the same time is now 84% of Americans
00:54trust private labels as much as the national brands. And so that creates a real opportunity
00:59for us. And we have over a 22% price gap when you compare the national major brands,
01:05supermarkets. We have a 22% price gap on private label, let alone once you go to the national brands,
01:11and then the savings really go from there. So we're welcoming in a record number of customers
01:15into our store. And we have a lot of momentum to meet, and that is where the growth plans come
01:20in.
01:21So we announced a couple of years ago a $9 billion investment over the course of five years.
01:26This will get us to over 3,000 locations by the end of that plan, which will make us the
01:30second largest grocer in America. And the real great thing is that this is organic growth that's
01:36happening in a lot of the markets that we've operated for decades. So a lot of our key Midwest
01:39markets, but then also all throughout the East Coast and West Coast, we have a lot of demand to meet.
01:45Well, give me a sense here. I mean, of the millions of new customers that you're pulling
01:49into the store, I mean, what is kind of the retention rate for those folks? Are these people
01:53just coming in because they're curious to see what Aldi has to offer? Or are you actually converting
01:57these people into long-term repeat customers? Yeah, we're actually proud to say that we're
02:03converting them into long-term customers. And we have an interesting story in that we've been in
02:08business now for 50 years, and our sales have grown for every single year for 50 years. And I think
02:13that
02:14goes to show the fact that it's grown, the adoption, the acceptance of private label brands,
02:19which is over 90% of what we sell. We're able to get people in because they understand that there's
02:24a price component. People know the data shows that they recognize Aldi as the low-price leader.
02:29But really, it's the quality that gets them coming back. And we run a different operation. It's very
02:35unique. We really pride ourselves on running an extraordinarily efficient operation that allows
02:40us to pass those savings on to customers. And that's what allows them to continue to come back
02:44and rely on Aldi for their grocery shopping needs. And when we talk about the value proposition for
02:50Aldi and your lowest price claims, I mean, what is the gap, say, with a company like Walmart, which,
02:56of course, also stakes its reputation on being the place you go to save money and find value?
03:02Yeah, we measure against many different competitors, and we keep close tabs on that. And we certainly
03:07understand what the price of a cart of groceries costs at all. And we measure it different ways.
03:11We slice the information and the data in different ways. But what we can say is, definitively,
03:18we have the largest price gap that we have at any point in the last five years. And that savings
03:23mean different things if you're comparing private label, if you're comparing national brands. But again,
03:28across the cohort of large national retailers, it's over 20% of people can save just on private label.
03:35So that is something that we continue to invest in. One thing that is pretty unique and we're pretty
03:40proud of is right now, one third of the items in an Aldi store today, when you walk in, cost
03:46less
03:46than they did a year ago. And that's something I would challenge any other retailer out there to say,
03:51I would tip my cap if they could, because it takes a lot of hard work to do that. And
03:55it's not something
03:55we typically go around shouting about every time we lower price. We don't really play games and it's not
04:01gimmicks to raise prices to lower prices and vice versa. But what we do is we're always working
04:06to pass along that value to our customers every day. And that savings really compounds over time.
04:13And I think that that savings and the quality that they get, that's really the engine driving
04:18our concept right now.
04:19How do you sort of hold the line, though, on those costs and on the pricing that you sort of
04:25provide
04:26to your customer, given that the price of everything is up? Beef, grains, obviously gas
04:33and diesel prices that feed into a lot of our food supply chain. Is this just a negotiation that
04:39you have with your suppliers in order to make sure that you're getting favorable pricing?
04:43Well, I mean, there's a couple of things in our favor here. And I would actually say the most
04:48significant is we're privately held and we're not ever chasing short-term profit at the benefit of
04:54pleasing shareholders on a quarterly basis. And I've been a part of so many conversations
04:58over many years where we play the long game. And sometimes it means that you lose a little
05:03and you have to invest in price in the short run. Again, it's challenging to have a third of our
05:07items cost less than they did a year ago. But what we've come to understand is over the course of
05:12time, when we do that and we make those short-term bets, it provides real savings for us.
05:17But, you know, there's headwinds. There's no doubt about that. We're feeling that. We see that.
05:21But there's also tailwinds. So whenever we can find categories to invest into, produce being one
05:27of them right now, that we see a real opportunity to drive in throughout the entire fall, incredible
05:32prices, much more than we usually do from a differential standpoint. We also know that there's
05:37an expectation that customers have of us that we need to run our model as efficiently and effectively
05:43as we possibly can. And when we do this, this unlocks the ability for us to pass along those
05:48savings. So there's no doubt there's challenges out there. But we're always seeking ways that we
05:52can invest in any way that we can for the long-term benefit of our business.
05:56I mean, as you expand across the country, are you finding regional differences in sort of
06:02what customer base actually exists there for Aldi? I mean, I think about your roots going back in
06:09the Midwest and Iowa back in the 70s. But then when I look at openings in Colorado and Maine,
06:14as somebody who's lived in a lot of these states, I mean, you know, it's a different complexion,
06:18a different customer. Is there a common thread that ties them all together, state to state?
06:23You know, one thing that's, I would have answered that question very differently 15 years ago.
06:26And 15 years ago, when we opened a new location, there was an adoption period for customers to
06:32understand who we are and our concept is different. We look different. We feel different when you walk
06:37in the store. But what's really interesting now is when we open a new location, within two years,
06:41it's doing the average volume, you know, in aggregate across the network. And so what we're
06:46seeing is the concept is out there. Again, a third of Americans now shop in Aldi stores,
06:51so it's familiar. We've become mainstream enough. And the concept is simple enough. And we have the
06:57top 1,800 high-velocity items. So we're actually seeing that there's not significant regional differences
07:03when we open stores in the Northeast as compared to, as you said, some of the stores that we've had
07:08roots for decades. And the concept really working throughout the entire country is, again, really
07:14driving the momentum that we have.
07:16I do want to ask about your digital strategy and how that sort of dovetails with maintaining the
07:21line on value. Obviously, the redesigned website, but that's in partnership with Instacart. And I'm
07:27wondering how you make those economics work on your behalf, where the value proposition through a
07:32digital channel as a customer is going to be commensurate with what I would get if I came into the
07:37store.
07:37Absolutely. And that's something that we've really invested in. And there's no doubt that our
07:42customers want to and need to shop with us in different ways than they did before. They expect
07:47an omni-channel experience now. So we relaunched our first-party website, and we've had tremendous
07:52success with that. We have great partners in Instacart and DoorDash and Uber that really help
07:58round out that omni-channel offering that we have. But for us, the value that we provide is always going
08:04to be at the heart of what Aldi does. And for the in-store shopper, we're always going to make
08:09sure
08:10that there is no better value that they can get. And there is a small additional charge when you shop
08:15online for us, like many other retailers. But our thought has always been, we don't want in-store
08:20shoppers to subsidize the cost of that convenience. Now, fortunately, our price gap is still great enough that
08:26even if someone didn't have any kind of a differential, we still come in as the low-price
08:32leader. But it's really the transparency that our customers have really always relied on us to have and
08:37operate with. And it shows in that the digital sales in our business are far, far outpacing brick and mortar
08:43right now.
08:44It's interesting, too. I mean, I'm old and I grew up in the Midwest. I remember Aldi, and I've seen
08:49it kind of evolve
08:50over the years. It's also curious to see how you guys have held the line on a lot of those
08:55quirks. I mean,
08:55obviously, putting a quarter in the machine to get the cart. And I do wonder how you adapt to
09:02a digital age where, you know, let's face it, I can't remember the last time I had change in my
09:05pocket. You know, we're all tapping our phones or our cards these days. Are you going to try to
09:09maintain some of those quirks as sort of a hallmark of Aldi? Or are you willing to maybe change them
09:14to update into this digital age that we're in?
09:18So I could give you the long answer as to how much we've changed over the course of the quarter
09:23century that I've been with Aldi, right? And I can also talk about how we haven't changed much.
09:27So what we will never relent on is having a very lean and efficient and effective operation. That's
09:34the heart of what we do. We have 80,000 amazing employees making that happen on a daily basis.
09:41They're the backbone of that. And so, so many of the attributes that someone might have seen from
09:46Aldi in the 80s and the 90s, they live in our concept. And for folks like me, and there's a
09:51lot of
09:51people like me that have been around in the business for a long time, we take a lot of pride
09:55in the steadfast discipline that we've operated our model with. But to your point, we need to evolve
10:01and we need to change. We need to meet customers where they need us. And so one thing that we
10:06were
10:07is we were one of the first brochures to roll out electronic shelf labels throughout the entire
10:11store network. That actually unlocked efficiency and savings that we could match and provide for our
10:16customers. But we also have this need to be digitally present. And that's how we talk to
10:21our customers. We communicate with our customers, certainly how they transact with us. So that's an
10:26evolving part of our business. And that's evolving much faster than any other component of our business
10:31that we operate right now. So we need to stay current. We've been making a lot of investments.
10:36We still have a lot of work to do there.