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Americans spend approximately 35% of their income each year on food


Americans spend approximately 35% of their income each year on food. In 2015, the amount we spent at restaurants exceeded that which we spent at grocery. The grocery segment has seen a good deal of change and transformation. Walmart leads it in market share with a 25% share of US grocery spending. The balance of the market is quite fragmented, with many players garnering small shares.
Full service supermarkets, (i.e. Hy Vee, Kroger, Albertsons) a staple in the grocery business have seen erosion and much growth go to Walmart, Wholesale Clubs (i.e. Costco) and most recently hard-discounters. The leader of the hard-discounter group is Aldi. In this study, you will read about the overall grocery industry. The focus of the case is the history, methods and business model of Aldi, a fast growing limited assortment grocery chain, who put its first USA store in Iowa City in 1976. Now they are 1800 stores strong in the USA.
Another key change in consumer-packaged goods is the rapid growth of private label brands and the supply chain that supports the concept. Grocers are now contract manufacturing many products, and creating their own “brands” or “labels”. Great Value from Walmart is the most prevalent USA private label brand. Kirkland from Costco another favorite among consumers.
Aldi carries 90% private label goods, meaning you will not find Heinz ketchup on their shelves, but Burman’s, Aldi’s private label for condiments. You will not find Folger’s or Starbucks Coffee, just their brand, Barissimo. They manage the supply chain for these products and this creates a unique product experience, and tighter cost management. Trader Joe’s, the quirky grocer from California has excelled in the private label limited assortment landscape, with higher prices, and a more organic value proposition.
For this assignment, you will read the case in your Harvard Course Pack titled Aldi and the Hard- Discounters March across America.
You should also watch this clip from CNBC to get a visual idea of the concept, and further your understanding of the brand and category.
If you haven’t ever visited an Aldi store, it may be helpful to your completion of the case, or you can simply visit their website for additional information and current operations initiatives.
Specific Assignment:
Answer the questions below, utilizing the case, video and a minimum of 4 ADDITIONAL outside sources. Your sources should be from independent, reputable business press. (i.e.Wall Street Journal, Bloomberg, Economist, Fortune). You may use the Aldi website, but understand it may have a high level of bias. You will be asked to look at textbook concepts and apply them in the context of the case.

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