Why Aldi execs overhauled their private-label brand strategy

The products themselves won’t change, though they’re getting a complete overhaul in packaging design. The new packaging has already started rolling out to store shelves, but the transition will take place over the next few years for the grocer to cycle out of its old packaging.

Modern Retail spoke with Aldi’s chief commercial officer, Scott Patton, and brand and design director, Kristy Reitz, to get a better understanding of why the company made this change and what kind of decisions these leaders had to make in the process.

The Aldi brand versus the ‘Aldi brands’

Patton said that, after hearing fans refer to brands as “Aldi brands,” the company started thinking about having an actual “Aldi brand.” He also said there was some confusion as to which brands were Aldi brands.

“We want [shoppers] to know when they walk in the Aldi store which items are Aldi items, which ones are private-label and which ones they can count on to have the quality, all the things that they like us for,” Patton said. “That was really the start of it.”

Even in his personal life, Patton said he’s noticed Aldi products in the homes of some of his neighbors, but that those neighbors didn’t even know they were Aldi brands because someone else in the household had done the shopping.

Adding the Aldi logo “just builds that confidence in where it came from,” Patton said.

Still, the company is acknowledging the awareness of some of its brands by not replacing all the names with just “Aldi.”

For example, Aldi decided to keep the Clancy’s brand of potato chips, pretzels, popcorn and other snacks, just adding the tagline “an Aldi Original”. That will also apply to other brands Patton said are recognizable, such as Mama Cozzi’s pizza, Specially Selected premium groceries and Simply Nature organic products.

Patton said that, while Clancy’s and others had good brand recall, others did not. For example, he said the Brookdale brand didn’t have as much loyalty in canned meat, so the company will replace that with the Aldi brand.

“I say it’s about time,” David Bisek, a longtime beef, CPG and grocery brand strategist, wrote on LinkedIn. “What was once the store people visited strictly for value has become a cultural phenomenon in the grocery industry. … This is exactly the right move. ALDI has the consumer momentum, a massive fan base, and the cultural cachet to proudly carry its own name.”

Jim Olson, senior retail insights manager for CPG market research firm Spins, said Aldi has long had a reputation centered around value, and that both the new Aldi brand and the “Aldi Original” label “just stretch out that reputation even further and wrap all their products in that trusted reputation.”

‘We want to get it right’

Aldi has been testing the new branding internally for around three years.

“We want to get it right,” Patton said. “We’ve been in the U.S. here for almost 50 years, and we’ve been doing private-label a certain way for the last 49 years, so this is a big change for us.”

Through customer research, the company learned there was a big affiliation between the retailer name of Aldi and the products themselves, Reitz said.

“We knew we had to capitalize on that by introducing Aldi as not only a hero or flagship brand on products, but also as an [endorser] of private label,” Reitz said. “That way customers know that … we stand behind that quality, we stand behind that product being sold to our consumers.”

Reitz shared one example of how the strategy evolved through testing. At one point, the tagline for the private label brands like Clancy’s that would stay was going to be “Always Aldi.” The company found through focus groups that customers preferred “an Aldi Original”.

“We thought [‘Always Aldi’] was just a really nice way to bring [Aldi] into our brands, and the customer sentiment did not equal at all our internal sentiment,” Reitz said. “We thought we really had the golden ticket with that one, and we were really wrong.”

Out with the old, in with the new

The company worked with branding and design firms Favorite Child on the Aldi branded-products and Pearlfisher, Contrast, Equator and Sun Strategy on the other brands, alongside internal creative and product teams.

The Aldi-branded products will have a consistent system, in terms of fonts and graphic design. For example, the candy products will have more fun packaging than the more traditional-looking baking products, but they’ll share similar panel systems that have a section in the middle for the product title, claims about the product or other copy. The company is also limiting the number of fonts to hold together the different categories as much as possible while still offering variety.

“We needed a design system that was really recognizable to customers but also could flex based on category cues when needed,” Reitz said. “We wanted to make sure Aldi was obviously displayed prominently on the package without being polarizing.”

She said, unlike other private-label brands, the company wanted to be able to make its designs more flexible, rather than having all the packaging look generally the same. She pointed to Walmart’s Great Value, where the packages all have a while bubble in the middle and a design that floats around it. That didn’t work for Aldi because so many of their products are private label and not as mixed in with other national brands.

“If it’s a super tight system, and you walk through the store, everything’s going to look very monochromatic,” she said. “They have to be distinct yet connected.”

Zooming out to other retailers

This represents a shift for Aldi closer to a grocer like Trader Joe’s or Kroger, which stamp their names on many of their products. On the opposite end of the spectrum are retailers like Walmart and Target, which let their private brands like Great Value and Good & Gather, respectively, stand for themselves.

“Retailers can go a lot of different directions with this,” Patton said. “You can put your name on there, you can create a name, you can have multiple brands. We wanted to find the lane that would work best for our customers based on what they were telling us.”

Aldi’s move doesn’t mean that Target or Walmart should put their company names on their products, in Olson’s opinion.

“It’s a different situation,” Olson said. “Target is very broad in terms of their product mix — a lot of major mainstream name brands and also owned brands. Some of their products do have the reputation of good quality. … There isn’t a need to put the big bullseye on everything, because those brands have already built up that reputation.”

Steve Zurek, vp of advanced analytics for NielsenIQ and a CPG expert, said Aldi has long been a leader in pushing the idea that private brands can be of high quality. What he believes Aldi is trying to do now is to generate more conversation around its products, as the consistent Aldi brand throughout the store is reminiscent of the Trader Joe’s brand or Costco’s Kirkland.

“If you think of the Kirkland brand at Costco, they do no advertising behind that; there is an organic conversation that’s been happening over a period of years,” Zurek said. “It’s gotten to the point where you’ve got Reddit threads talking about ‘Who makes Kirkland vodka?’ or ‘Who’s making the Kirkland pizza?’ Those conversations just start to build awareness.”