Shortages? What shortages? Aldi CEO sets out ‘unique advantages’ on availability

‘Ten days to save Christmas’ was the BRC’s dire, headline-grabbing warning to government last week.

It would only take a look at availability levels in many supermarkets right now to see the BRC’s warning over the lorry driver shortage is probably no exaggeration.

Yet amid the chaos – now topped with consumers coming to blows on petrol station forecourts amid challenges for fuel supplies – Aldi appears to somehow be well-stocked.

Aldi came top as guest retailer in the Grocer 33 last week, notably scoring highest for availability, with only one item on the list out of stock. It was a far cry from Morrisons, at which 10 of the 33 items were out of stock.

So how is Aldi doing it?

As the discounter today revealed its full-year results for 2020, CEO Giles Hurley said it was “difficult to believe anyone is immune” to the disruption, and acknowledged “at the end of a trading day you might see we’re a little bit lighter” than usual.

But he argued Aldi had “a number of advantages” that meant “we can insulate our customers more effectively than just about anyone else”.

Three advantages, to be precise:

Range

Being a discounter means having a range the fraction of the size of a mult such as Tesco. The challenges for supermarkets have been described recently as “like whack-a-mole” – solve one problem and another one pops up. For Aldi, there are fewer moles to whack.

“We’re in a unique position with a refined range,” said Hurley. “We have around 2,000 products to stock and manage.

“That’s a very different proposition to a multiple retailer, who might have 30,000 or 40,000 products.

“We simply have fewer products to supervise, to control, to manage, and I think that gives us that unique competitive advantage.”

Sourcing

You might argue fewer suppliers in fact makes Aldi more vulnerable to a break in the chain. But Hurley says it’s easier to control such breaks thanks to the second advantage: the chain is shorter.

“Over 75% of what we sell comes from British-based suppliers and manufacturers and that gives us the benefit of additional control,” he says.

“Our entire core ranges of fresh meat, milk and fresh eggs are from British Red Tractor approved farms.”

For some retailers the whack-a-mole game has meant prioritising certain categories such as fresh produce, or focusing on geographical regions of high demand. Not Aldi, claims Hurley. “We’re able to prioritise all our products,” he says.

“And geographically I have to say no particular focus. All of our trucks are running across all of our distribution centres.”

The importance of a short chain is highlighted by Aldi’s popular Specialbuys, which have been an exception to the rule. Throughout the course of this year, there been a long list of ‘Specialbuys delays’ on Aldi’s website.

This is largely down to the much longer supply chain they rely on from China. “Clearly when Ningbo closed I think for the whole of European retailing that presented some challenges, but as always we’ve been doing everything we can to make sure our customers are not affected,” Hurley says.

Driver employment

As Hurley says, Aldi’s trucks are running. That’s thanks to advantage three: the majority of Aldi’s drivers are directly employed by the supermarket – over 75%, Hurley tells The Grocer. It means “we control their terms and conditions and we’re able to make sure those are market leading and that’s always been our commitment to our colleagues”, he says.

In one sign of how Aldi is not immune to the disruption, the market conditions have resulted in the discounter upping driver pay.

“We always keep a careful eye on what’s happening in terms of pay rates and we actually reviewed our pay rates in August based on market conditions and increased the rates of all our driving staff,” says Hurley. “That’s absolutely right, proper and important that we recognise the market dynamics of the industry and reward our teams accordingly.”

As for Christmas, Hurley’s outlook seems a world away from the BRC’s: “We’re going to have our best Christmas range ever.” That’s even if he does concede some issues. “I don’t think anyone in the market can guarantee there won’t be inflation,” he admits. ”What I am able to guarantee is customers will always be able to get the lowest prices in Aldi.”

Is there anything that can threaten Aldi’s apparently unshakable confidence? Even Hurley, a CEO typically cautious in his comments to the press, provides a hint of his acceptance that the only real certainty at the moment is a level of uncertainty.

“I guess implicitly the pandemic keeps on giving, and inevitably you wonder what’s around the corner, but at the moment from everything we know we’re in a good position,” he says.