When Aldi came to town

 

It's June 19 and an excited crowd is forming in a little retail arcade in Thornbury, a quaint middle-class market town on the outskirts of Bristol. But they are not queuing for the opening of a Waitrose or Marks & Spencer, as would befit the demographic. The fervour is all about Aldi. And as the economy deteriorates, it's a scene being repeated all over the country.

The first 100 people in the queue are clutching Aldi golden tickets in their hands, which means they have won anything from an LCD TV to a travel kettle. The retailer's four-day PR campaign of events in the town has begun in earnest.

Housewife Wendy Gallett is second in the queue and has been waiting since 6am. "I like a freebie," she says. She has never been in an Aldi store but is looking forward to the opening. "It looks very good," she says. Retiree Mary Johnson is already an Aldi fan. "I used to use them when I lived in Spain. They will be excellent for Thornbury," she says.

A little later, with a trolley full of purchases, sisters Jo Severinsen, a housewife, and Emma Bye, a hairdresser, are also impressed. "I've never been in an Aldi before, but we need something different in Thornbury and I think it will do well. It looks clean and fresh and, although it was too busy to look properly today, I will be back," says Severinsen.

The Aldi staff themselves are relieved that opening day is finally here. The retailer took the store last November after former tenant Somerfield closed its doors. But a confidentiality clause and a six-month opening ban initially imposed by Somerfield resulted in a period of legal wrangling before Aldi could even confirm it was taking the site.

Initial local reaction to the news that Aldi was coming to town had been far from positive. As a predominantly middle-class area where the likes of Somerfield and Safeway had both failed to thrive, the local council – and the Peer Group, owner of the St Mary Centre, in which the store sits – had hoped to attract a more premium offer. Both Marks & Spencer and Waitrose were thought to have been approached.

In January, the Peer Group issued a statement explaining its worries about the lack of investment in the supermarket site in previous years. "The company has been very concerned as to the management and presentation of the Somerfield store and it became evident that a further assignment was to take place. Again, the company tried to get its preferred tenant to take over the unit, but in the end agreed to the assignment to Aldi," it stated.

The Peer Group and the council weren't the only ones with concerns. Alan Cole, centre manager of the St Mary Centre, says: "When I was first informed that Aldi was taking the store, I was surprised that they were coming to Thornbury and was perhaps a little apprehensive because of the type of retailer they are perceived to be." But, he adds: "Since then, those perceptions have been shattered. They have been very professional and anxious to prove themselves."

The Peer Group also changed its opinion as it learnt more about the business. "The company [the Peer Group] has researched the development strategy of this company [Aldi] and has taken the view that it is a very progressive organisation with a history of good fit-out and well-managed, competitive stores, so we have finally agreed to this assignment," it said in a statement. In fact, about £1 million has been spent on fitting out the store.

Jochen Vogel, Aldi store operations director for the South and Southwest, points out that the present economic climate has also helped customers warm to – and even embrace – the idea of Aldi's arrival in the town. "When Somerfield closed down, the economic situation wasn't as bad as it is now. Back then, they were looking forward to a Waitrose or M&S. Now I want to provide Aldi prices, but in a Waitrose or M&S way," he says. Official data backs up the ongoing appreciation for value: at the end of May, TNS data revealed that the likes of Aldi and Lidl are prospering as the economic squeeze hits shoppers.

Vogel says the Thornbury experience has been similar to an opening he oversaw in Romsey, Hampshire, several years ago. Like Thornbury, Romsey is a small, middle-class market town. "But the shoppers are intelligent and look into their pockets and say: 'I want to still live like I have been but I don't want to spend so much'," he says.

Winning hearts and minds

Aldi regional managing director Peter Casey agrees. "The economic climate has meant that people have a more open mind as to the possibility of making savings on their food bills," he says.

In fact, Aldi says there has been huge interest in the new store. "I've never had an opening in the south of England [that attracted] more interest," says Vogel.

Much of the excitement could be attributed to the fact that, for seven months, Tesco has been the only major food store in town. "There is a growing feeling that Tesco may be exploiting its single-store status here," says one local who asked not to be named.

Local councillor Clare Fardell has heard similar concerns. "I have had a very large number of complaints that Tesco put its prices up after Somerfield closed," she says.

Stuart Collins, store manager of the Thornbury branch of Tesco, says this is absolutely not the case. "That's the last thing we would do," he says, adding that it would, in fact, be nonsensical because Tesco is in the town "for the long, not the short-term". "We would have preferred someone to open when Somerfield closed," he says.

Collins says he welcomes the Aldi opening. "We are looking forward to having them. It will complement the offer in Thornbury and, if it draws more people into the town, then that's a good thing," he says.

Nevertheless, Tesco will be waging its own battle against Aldi. "Aldi will be promoting its unit and business and I suspect Aldi will have a great campaign," adds Collins. But increased price promotion activity, product sampling of local produce in-store and a limited money-off mailing to selected customers are all being used by Tesco to ensure it stands up to its new competition. "We're making sure we are promoting what we are doing well," he says.

So will Aldi succeed in the long term? Cole says it will require significant effort, but he thinks so. "They have got a hearts-and-minds battle to win but people will be convinced if they make the effort to go in the store and try it out," he says.

Councillor Fardell agrees. "There are a few people who say we would rather have had something more upmarket, but I think they will shop there. What people say and what they do are two different things," she says.

But Aldi is aware that a process of public education will need to be undertaken. Teaching consumers how and why Aldi operates as it does is a vital part of the store's long-term acceptance in the town.

To help with this task, it has installed extra signage both inside and outside the store to explain its processes, such as the retailer's policy of customers loading their shopping back into the trolley at the checkout and then packing their bags at benches at the back of the store. Vogel says it will also employ extra staff in the first few weeks to help answer frequently asked questions, such as why Aldi only offers trolleys. "People always say you need to have baskets, until you explain to them that, to do that, you would need to put prices up because they go missing," he says.

Extra consideration is also being given to how staff communicate Aldi's way of operating to customers. "In the past, I sometimes haven't had store assistants able to explain that in a clear, friendly way," says Vogel. Paul Kember, store manager for the new Aldi store, agrees. "It's important that it comes across as advice – that's been the stumbling block in the past," he says.

Vogel says the store will be overstaffed until he feels the process of educating customers is complete. "I have four managers, which is more than normal – I'm overstaffing the store in the beginning because, in the past, we have gone into some really nice locations but tried to educate the customer too quickly," he says. Vogel hopes that he can return the store to an operational norm for Aldi within two or three months, cutting back to a core staff of 15. Somerfield previously employed 40 people in the same site.

Vogel insists that the hearts-and-minds battle can be won in Thornbury and many other locations like it. "I'm convinced that when you get it right operationally, people realise you are more convenient and better priced," he says. "You need to actively show customers how you can undercut other people's prices. When you can do that, you can see it in their eyes that they understand," he says. Casey agrees. "Once the customer adopts it and sees the sense and the convenience, there is no going back," he says.

Aldi wants to maximise its opportunities as customer spending tightens. It will spend £1.5 billion on a five-year UK expansion plan and aims to open a new store every week. Its long-term aim is to have 1,500 UK stores. These are early days in Thornbury, but with 1,800 customers flocking through its doors on the first day, there are signs that yet another town is keen to learn the Aldi way.