Aldi, which is expected to take Southern California by storm with its deeply discounted generic groceries, has announced the locations of its first 11 stores in Orange and Los Angeles counties. But, as Trader Joe’s cousin moves into high gear with its coast-to-coast expansion, one other discounter is ready to strike first: Grocery Outlet.
On Friday, Grocery Outlet’s Costa Mesa store, which opens Dec. 3, will start accepting applications. Later this month, the German-owned Aldi is hosting four job fairs for stores in Buena Park, Fountain Valley and Anaheim, as well as eight markets in the Los Angeles area.
Aldi said it will hire more than 1,100 employees for its Southern California stores as well as its regional headquarters and warehouse in Moreno Valley. The stores are part of the first wave of 25 Aldi locations opening in the region from March to July.
The privately run Aldi has won the pocketbooks of budget-conscious shoppers by selling knockoffs of the nation’s most popular brands, such as Frosted Flakes and Velveeta cheese.
“They’re going to rule,” said Phil Lempert, a food industry analyst and editor of the popular online trade publication SupermarketGuru.
Lempert also is impressed by Grocery Outlet.
The Emeryville-based discounter said it will open 14 stores in Orange County and Los Angeles over the next year.
The family-run grocery stores offer markdowns of 40 to 70 percent on popular brands like Tide, Kraft, Kellogg’s, Naked Juice and Tyson.
The entrance of Grocery Outlet and Aldi comes as Haggen ends its brief presence in Southern California.
While Haggen’s lackluster results led to a Chapter 11 bankruptcy filing in September, industry experts say Aldi and Grocery Outlet won’t make the same mistakes.
The two chains are expected to shake up the $44 billion Southern California grocery sector with the one thing Haggen failed to give shoppers: extreme bargains.
Grocery Outlet stores in Costa Mesa and Westminster will open in early December, while a third is slated for late January in La Habra.
The openings mark a comeback for the 227-unit chain, which previously operated outlets in Buena Park and Fountain Valley. Those stores closed a few years ago when the leases expired.
So, can these two low-price brands co-exist in the same sector?
Experts say yes. Both bring something different to the table.
Aldi caters to shoppers looking for popular pantry and refrigerator basics like peanut butter and toilet paper. Lempert said bargain-hunting millennials will embrace the copycat brands Aldi has to offer in a no-frills setting.
“They don’t need fancy stores and don’t mind paying a quarter for a shopping cart,” he said.
That was true for Laguna Niguel resident Matt McKeon. When he went to college in Indiana, he routinely shopped at Aldi.
“Aldi saved me from going hungry,” McKeon said. “I was able to survive on under $20 per week. The food was not very healthy, but it was nutritious enough to have me complete my studies and graduate. I loved it, and I am grateful it was an option for me in that time of my life.”
Grocery Outlet, on the other hand, has been compared to Costco and Trader Joe’s – brands known for tempting shoppers with seasonal deals and unusual grocery finds.
Debbie Bloom of Huntington Beach shopped at the former Fountain Valley store at least once a week for produce and “great prices on specialty products.” She’ll make the trek to Costa Mesa once it opens.
“Grocery Outlet’s deals are worth the travel,” Bloom said.
Lempert said Aldi and Grocery Outlet “are going to do fabulously” in Southern California.
As Grocery Outlet prepares to open its first store Dec. 3, here’s a closer look at how the chain stacks up against Aldi.
Discounting Strategy
Grocery Outlet: Stores buy overstock or discontinued items – giving them the ability to offer steep markdowns on name brands such as Kraft, Amy’s Kitchen, Kellogg’s and Tide. The stores sell beer and wine, produce, meat, health and beauty care items, over-the-counter drugs, household products, toys and gifts. Items such as milk, meats, and eggs are sold at the lowest price available in the marketplace. No coupons.
Aldi: Aldi claims to save shoppers up to 50 percent on their grocery bills by selling knockoffs of the 1,300 most frequently bought national brands. The company stands by its knockoffs and offers a “double guarantee,” which replaces the product and refunds the customer’s money if they’re not completely satisfied. No coupons.
Organic, natural foods
GO: Stores include a NOSH section dedicated to natural, organic, specialty and healthy foods. The produce section also offers a basic assortment of organic fruits and vegetables.
Aldi: Stores sell USDA-certified organic produce, sustainable seafood and locally grown fruits and vegetables. Shelf groceries include “better for you” foods under the private labels Fit & Active and SimplyNature.
Carts, check out lanes and bags
GO: Full-service checkout lanes, including bagging. Stores take credit cards. There is no cart rental fee. Grocery Outlet stores charge a fee for disposable bags where required by law.
Aldi: After the cash-only checkout, shoppers shift their goods to a long counter to bag their groceries. The company says by moving people out of the checkout area, it keeps the lines at the registers moving. Aldi requires shoppers to pay a 25-cent refundable deposit for a cart. Customers must bring their own bags or buy store-brand reusable bags. Aldi is testing a credit card program that, if successful, would be rolled out to all stores.
Private label assortment
GO: The company’s business model centers on selling surplus or discontinued national-brand items. As such, only 5 percent of the store’s goods are private-label. An average store sells about 5,000 to 6,000 items.
Aldi: The store sells private-label knockoffs. Its main in-house brand is Millville. Some name brands are sold. The stores typically carry one or two options of most goods.
Store ownership, wages
GO: Grocery Outlet expands through a consignment model. The company leases each store and provides the inventory to independent operators who manage the store. Employees are not part of unions. The company does not disclose wage information. Each store hires its own staff. Job-seekers can apply at groceryoutlet.com. The Costa Mesa store will host a job fair from 10 a.m. to 2 p.m. Friday.
Aldi: Short for “Albrecht Discount,” the chain is owned by the Albrecht family of Germany. Aldi employees work an average of 33-40 hours a week and are eligible for benefits including health and dental insurance. Shift manager positions start at $18 per hour and go up to $23 per hour with tenure. Aldi said early hiring of shift managers is crucial to its operational success. Shift managers hired from recruiting events “will undergo extensive training in California over the next several months,” said Gordon Nesbit, vice president of Aldi’s Moreno Valley division.
Aldi has not released wage information on non-manager positions. However, the company says it offers wages and benefits that are higher than the national average for the retail industry.
National footprint, expansion plans
GO: Formerly called Canned Goods before its name changed in the mid-1980s, the chain has locations in California, Idaho, Nevada, Oregon, Pennsylvania and Washington state. It is planning to open 14 stores in Orange County. The first stores are opening in Costa Mesa (Dec. 3), Westminster (Dec. 10) and La Habra (Jan. 28).
Aldi: The German-owned chain has 1,400 stores in 32 East Coast, Midwest and Southern states. Aldi’s West Coast expansion plan calls for 2,000 stores by the end of 2018. The first 25 stores planned for Southern California will open between March and July 2016.
Nesbit said the chain intends to open more stores in Orange and Los Angeles counties later in 2016.
Tell us: What is your experience with these stores or their brands? Write to nluna@ocregister.com and let us know.
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