On Tuesday night, Aldi was crowned The Grocer of the Year at The Grocer Gold Awards 2013. Hours later, we caught up with joint managing directors Matthew Barnes and Roman Heini for a Q&A on their thoughts about the award, and their plans for the future.
Q. Where are you?
Roman: We are on a store tour in Winchester. We had an early start this morning.
Q. Not resting on your laurels then?
Roman: Definitely not! No, no.
Matthew: We have a lot to do and see. It’s very important for both to get out into stores, seeing our people, and our competition, at least two days a week. That won’t change.
Q. What does the award win mean?
Matthew: It’s a fantastic recognition of all the hard work, right across the business, that our employees have put in over the last year, both in stores and with our customers at the coal face of the business, but also those behind the scenes, in our director teams, and buying teams. We have set some major challenges to people in our business over the past year and this is something we can all be very proud of. We put a Facebook post up this morning and it’s already had a thousand likes. It’s recognition not just of Aldi employees but also our customers, that they are making the right choice in coming to us.
Roman: The title itself means a lot. The Grocer of the Year underlines our change from being a top-up shopping destination to being a food shop destination. So it’s really good to see.
Q. You’ve massively expanded your range. What investment have you made in the buying team?
Roman: We have doubled the size of the buying team in terms of the number of people over the last three years. We have promoted a number of people into the roles and we have more categories now. We are keen to get more British suppliers for different products. Being closer to the British market is only possible if we have more people in the department, so that prompted a lot of change two years ago.
Q. Can you put a figure on the investment?
“There has been tremendous investment and we have moved at a rapid pace in buying and that is already paying dividends”
Matthew: Not a cash figure, no. We have doubled our buying director team as well as creating areas of expertise and specialisation, like quality control, logistics and customer service. So creating a more comprehensive professional and specialised buying operation with the ultimate goal of finding more home-grown suppliers, while supporting those smaller suppliers that have had trouble accessing us in the past. We have an open door policy. We want to meet with people. It was a criticism in the past that we weren’t open and accessible enough and we need people in the business that can meet with potential suppliers and take things forward. There has been tremendous investment and we have moved at a rapid pace in buying and that is already paying dividends. When our product range won so many accolades at The Grocer Own Label Awards last month, it was a real feather in our caps.
Q. Are you growing any category in particular?
Roman: It’s mainly the fresh area we are trying to grow. Its expanded quite dramatically in terms of the line numbers overall. Mainly fresh meat, produce, bakery and chilled. We are looking for more British suppliers. We want a short supply chain between the producers and the customers. It means a fresher, better quality offer. After horsegate the British provenance is even more important in the future.
Q. What proportion of the range is British?
Matthew: Over 50% of our core range is British. We see that growing all the time. We believe we are as British as any other retailer. One of the big changes we have made over the year is to make our range more British. Our customers said there was not enough choice, so we pushed up from 1000 to 1350. We have invested a lot of time and money in doing that and we will continue to do so and expand going forward.
Q. Were you surprised not to win discounter of the year?
Roman: Probably a little bit! We have tried to get our heads round the thought process that might have prompted the judges to give it to Poundland. One reason might be because we are not seen as a discounter anymore which from our end doesn’t seem right. We are still a limited line discounter even though we have grown the range quite a bit and have grown in other areas. Compared to others in the market we are still a discounter. That won’t change.
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Matthew: We are very proud of our discounter heritage. Very proud. In terms of what discount stands for, a selected range of products, EDLP, honest value savings, price consistency, that is what discount retail is all about. Yes, we have evolved our model to be more relevant to the British consumer and resonate more, but we are still proud of being a discounter. We don’t see that changing.
Roman: We are Discounter 2.0 - even fresher, more products, but still overall a limited range. We are the only operator in the market that offers that at this moment in time.
Q. So, however much you evolve, you will never lose those core discounter values?
Matthew: Absolutely right! We won’t. It’s our DNA. It’s part of our international success and the evolution we have done in the UK hasn’t changed those core values. A selective range of products at outstanding prices, and quality which matches the brands. We will continue to work like that. We have a unique point of difference, every business needs one. Our discount model gives us that and we won’t move away from that.
Q. What else has contributed to this success?
Matthew: It’s very fair to say that in the past service has been a criticism. It wasn’t good enough. We had a very honest session as a company and we agreed with that. In the last two years we have put a very comprehensive customer service project into place in the business [including] mystery shoppers. Every single store has a mystery shop every week which tracks very clear KPIs and performance criteria. Stores are tracked on that. Behind the scenes we also have the Pulse customer feedback programme which is a powerful tool, although it’s only powerful if you react to it. We are flexible and nimble. Customers are the heart of our business and we listen to them.
“We are Discounter 2.0 - even fresher, more products, but still overall a limited range”
Roman: We have a few examples of where customer feedback has made us evolve. We extended opening hours.
Matthew: We enormously increased parent and child spaces, baby trolleys – we have three new types of baby trolley now. We have introduced midsized trolleys. It’s all come via the customers. We are prepared to listen but also act, and we have been rewarded with their loyalty.
Roman: Staff numbers have doubled over the last three years. In 2012 we hired 4,000 people and we are looking at the same this year. That causes challenges, we have to train them and maintain our culture.
Q. How do you recruit and train that many people without an HR department?
Matthew: We have introduced a recruitment and training department. We believe in our management being responsible for recruitment and performance reviews, but we have introduced some people into our business [to perform certain HR functions]. We believe we need a resource within our business to help us review our training programmes, to look at different ways of recruiting, and going forward, to be the best employer we can be. The number of new people requires a separate resource to help us improve in that area. We are setting up an entirely team. We are really excited by the opportunity with a separate resource within the business.
Q. How are you going to spread the news of this win?
Roman: We will use all the channels available, national press ads, our website, social media, and in stores. We will make the most out of it. Our own staff will get the news via material in stores and also via our newsletter.
Matthew: We are very proud of it and we won’t be shy of telling people about it and sharing the good news.
Q. Do you see your main rivals as the top five?
Roman: We are all in this together. If we gain share, unfortunately it comes to the detriment of one of the other guys. It’s part of the territory. In terms of average basket size we are not far off Sainsbury’s. So in terms of average number of items per customer we are not far off the top five.
Matthew: Our customers are seeing us as increasingly viable, particularly in fresh, as an alternative to the top five. When you look at the Nielsen figures, our average number of items has grown and grown. When you consider that our range is a fraction of theirs it speaks volumes for our relevance. Shoppers are voting with their feet and responding to our offer.
Q. You last won The Grocer of the Year in 2009. What have you done to ensure success doesn’t dip like it did in 2009/10?
“Staff numbers have doubled over the last three years. In 2012 we hired 4,000 people and we are looking at the same this year”
Matthew: Any experience you learn from. We were in a different era in 2009. It was a different time for the business. For us it’s about sticking to our core principles, ensuring we continue to invest in our store portfolio, continue to expand, while continuing to stick rigidly to our philosophy and not losing sight of that. It’s a very competitive market. We are competing against fantastic companies. We have got to keep sharp, keep our offer razor sharp, and keep listening to our customers. It’s as simple as that. Our basic model will continue to attract more customers and continue to be successful.
Roman: When we look back at the last few years, the whole management team has been around for 4/5 years. We all experienced the downturn. So there is no room for complacency. We keep on our toes.
Q. Is that togetherness a big strength?
Matthew: It’s a key strength. You can’t put a price on it. When you go through a difficult time – and 2009 was difficult – when our market share started dipping, we were not in a healthy state as a business. So our feet are firmly on the ground. We are all very aware of how tough the market it. It’s hard to keep momentum. It requires a stronger work ethic than at any other time. We are a tight team. We work very hard for each other. We are very proud of awards like this - the recognition of all that work makes us stronger. That we have been through that together holds us in good stead and it’s a formidable attribute for us as a company.
Q. Can you keep up this level of momentum?
Matthew: We have absolutely no idea. We are still growing at a rate we would have considered amazing a year ago. We continue to surprise ourselves. The future we believe is bright. We will open our 500th store in the UK in the next few months, we have plans to continue growing, we will open 40 this year and upwards of 40 next. We believe there is a lot more to aim for. An awful lot of customers we haven’t got into our doors yet. We need to convince them to give us a try through our core messages of fresh, quality and price.
Roman: We want to increase the average spend further. We don’t attract all the customers that live nearby the store. We still have over nine million potential shoppers in a three mile radius of our stores that have never visited.
Q. Are you targeting a particular geographic region?
Both: No. No.
Matthew: No particular area.
Roman: Across the board. Wherever we have the opportunity we are happy to go for it.
Matthew: Our property team is expanding. We have people on the ground throughout the UK. We have no area of focus other than finding the right site in the right town and there is still a lot of people nearby existing stores we are yet to convince to come in. There are also many people who don’t have an Aldi within 20 minutes.
Q. A year ago you were very rigid about store size – then you opened a smaller store. What prompted you to relax that rigid stance?
Roman: It actually hasn’t relaxed. Overall we are still aiming for our standard footprint. That hasn’t changed. Yes, we opened our Kilburn store which is a bit smaller but we always knew that if we wanted to have more stores in the M25 we would have to be more flexible. And we can be flexible, but outside the M25 we don’t need to be.
“We would go bigger… If and when 10,000 sq ft isn’t big enough we would consider it”
Matthew: Consistency creates efficiency. It really enables us to pass it on to customers in terms of price. With our growth, some stores are under pressure with limited car parking. We have had to put more tills in stores in many stores, from four to six, so up by 50%. It’s in line with the increase in customers. There is no doubt we are looking at the size of stores but our model is our model. Our formula is our formula. We adapt and evolve the business in the face of what we see. There are growing pains in the business but they are challenges we enjoy tackling because they come from a positive standpoint. We are happy to have challenges like those. We have some way to go on customer service but we are working very hard on that.
Q. You went smaller, would you go bigger?
Matthew: We would go bigger. If circumstances required it, we would. If and when 10,000 sq ft isn’t big enough we would consider it. But there is no plan to do that now.
Q. You must discuss online. When you do, what do you say?
Matthew: Online is clearly an area we need to be abreast of and watch carefully. The growth is exponential. In our customer feedback it’s coming on our radar more and more often as something our customers want. By the same token we are yet to be convinced it’s an area of profit for our competitors, and our business model requires us to be more efficient than our competitors. So we will watch it very closely and with interest, but we have no plans right now to do anything about it.
Roman: With the current opportunities we have, it doesn’t spring out as the biggest at this moment in time.
Q. What is the biggest?
Roman: To grow our existing store estate and replicate it in areas we are currently not available in. The property market is a fairly good one to expand in. We see more opportunities in range as well. So the biggest opportunity is a combination of expansion of store numbers and to grow the range to be fresher and more British than we have ever been before.
Matthew: And convincing customers that we are a viable alternative to the top five. We often talk to customers who refer to us as a secret. That secret is out and awards like this are another way for us to engage consumers and say, ‘Look, give us a try. We think you’ll be surprised’.