Aldi expands same-day delivery to Chicago
Beginning today, Aldi is adding Chicago to the list of cities where online shopping and home delivery via Instacart will be available, according to a press release. The discount chain already offers the same partnership in Los Angeles, Dallas and Atlanta.
The German-owned retailer noted that, through the end of May, first-time Instacart customers in the new delivery area can take advantage of $20 off, plus free delivery of their first order of $35 or more, by using the code LOVEALDI.
Aldi has said it plans to spend $3.4 billion to bulk up its total number of outlets in the U.S. to 2,500 from the more than 1,750 it has now. According to the Food Marketing Institute, online grocery sales may end up constituting 20% of the total by 2025.
Quite a few other grocery retailers have been partnering with Instacart lately. Sam's Club just joined forces with the popular e-commerce delivery service, Sprouts Farmers Market announced in January that it would roll out delivery with Instacart to all of its major markets, and Albertsons recently inked a chainwide deal with the provider.
In Aldi’s case, the expansion to Chicago — its U.S. headquarters are in suburban Batavia, Illinois — is interesting given the discount grocer's rapid growth. It's taking aim at promising markets throughout the country and disrupting established names in the process. It's also searching for innovative ways to grow, including an intriguing partnership with Kohl's that was recently announced.
While the Chicago expansion makes sense for a company with a home base there, it's also a huge market and not far from other Midwest and Eastern locations where Aldi has outlets. In fact, the only Western location where the retailer currently has stores is Southern California, but that's likely to change given the company's tentative plans to build a regional office and distribution center in the Phoenix area.
As a purveyor of "premium" private-label brands, Aldi has spent considerable time and money positioning itself to compete with U.S. grocery companies. This includes a growing array of fresh products, including meat and produce. According to the Private Label Manufacturers Association, private brands accounted for 17% of total grocery sales last year as a growing number of consumers prefer them to national brands.
The only question mark surrounding its online push is whether Aldi can gain new customers and build bigger baskets, or whether it will simply cannibalize sales from stores. Aldi's convenience model is centered on its small-format locations, and over the course of four decades in the U.S., it's learned how to merchandise and effectively curate its assortment. Will that convenience translate online? And will it stand out against competitors like Kroger and Walmart that are taking a hatchet to prices?
Spurring other retailers to lower their prices is part of Aldi's model, but even with those cuts, competing retailers usually struggle to match the discounter. As consumers become increasingly comfortable with online grocery shopping, those savings won't be lost on them.