According to Lebensmittel Zeitung, Aldi Nord and Aldi Süd in Germany are set to align the sourcing of their private label brands by the end of 2020.
Aligning sourcing and strategies
In Germany, the two companies already work together. Aldi Nord and Aldi Süd started joint discounted price campaigns on branded products in January 2019. The two companies also work closely on sustainability and on the reduction of plastic packaging.
Aligning their private labels will allow both companies to potentially offer lower prices to shoppers and increase their competitive position against other retailers, especially Lidl. Both discounters will be able to join forces to organise common and more effective promotions and marketing campaigns. It will also end the confusion for shoppers when travelling to different parts of the country.
Category sourcing split between the two discounters in Germany
The two discounters will split categories’ sourcing management between them, leading to the harmonization of private label brands. Aldi Nord has already signed an agreement for the sourcing of pork and will be responsible for soft drinks from September. Aldi Süd will be responsible for the dairy category. Other categories’ sourcing management hasn’t been communicated.
Wider implications in Europe?
This new strategy could have potential implications for suppliers in other European markets. Nothing has yet been announced, but we expect this sourcing strategy could affect the discounters’ suppliers in most of the 17 countries where Aldi South and Aldi North are currently operating.
Across Europe, Aldi North and Aldi South have a combined turnover of €61,3bn. If they were to continue to work closer, this would make Aldi the second largest retailer in Europe, behind Lidl and ahead of Tesco and Carrefour.
It shows the fast expansion and increasing importance of the discount channel in Europe. By 2023, the discount channel will be the biggest contributor to the retail market sales growth with an added €90bn.
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