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RETAIL VIEW: Aldi looking for suppliers as it enters Texas

Aldi, a small-format discount grocer, is on track to open its first Texas stores next spring and has actually bumped the number of initial store openings to 30 from the originally planned 25.

The Batavia, IL-based retailer has also announced that it is looking for local suppliers, including produce suppliers, to help stock those stores. Martha Swaney, a spokeperson for Aldi, said that while the retailer will continue to use some national suppliers, it also wants to establish relationships with local wholesalers and grower-shippers, as supporting the local community and economy is an important part of the Aldi model.

She said that the company is looking for wholesalers in the Dallas-Fort Worth area, but would also be open to working with grower-shippers anywhere in the state.

"This is a unique move for us, and we want to work with local [produce] suppliers just as we did when we moved into Florida," she said.

Supporting local farmers is always part of the Aldi plan, Ms. Swaney said, but there is extra emphasis on that program when moving into an agriculturally rich state such as Texas.

Aldi has more than 1,000 stores in 30 states spread across the eastern half of the United States. With the addition of a new store in Massachusetts this year as well as the entry into the Florida market in 2008, Aldi has stores in every state from Kansas to the Atlantic Ocean, except Louisiana, Maine and New Hampshire. The firm has not announced plans to enter the 20 states where it is absent, except for Texas, but "we are always looking for opportunities," she said.

In 2008, the company added 100 stores, and this year it has followed up that expansion jump with 75-80 new stores. Other than the 30 announced for Texas in 2010, Ms. Swaney said that other store openings have not been announced but that the rate of new store openings would mirror that achieved over the last several years.

Each Aldi store has a footprint of about 17,000 square feet and carries an assortment of items concentrating on those products that are purchased most frequently.

A company fact sheet says that the retailer "sells more than 1,400 of the most frequently purchased grocery and household items in manageable, non-bulk packaging. Customers find 90 percent of their average weekly shopping list at Aldi."

Ms. Swaney said that the produce department is one of the more important areas of the store and that the retailer has seen "significant growth in fruit and vegetable sales over the last few years." She said that it is one of the departments frequently used to bring customers into the store. What sets this convenience-store format apart from some of its competitors is that it also emphasizes low prices. It claims to have "prices up to 50 percent below traditional supermarkets."

A large percentage of its items are sold under its own store brand. For its Texas stores, the company has invested more than $50 million in capital expenditures and plans to open a 500,000-square-foot distribution center in Denton, which is a suburb of Dallas. Its first 30 stores will be located in the Dallas-Fort. Worth area. The distribution center is scheduled to open in January, with the first store openings slated for March.

Ms. Swaney said that the Texas store format and size are following the traditional Aldi schematics, but like all its newer stores it features higher ceilings and more windows to bring in more natural light. She said that the company also is using brighter graphics to update its look.

The corporate parent of Aldi's U.S. operations is based in Germany, where it has more than 2,500 stores. The firm name is derived from Albrecht Discount, with the Albrech moniker coming from the two brothers who started the operation many decades ago.

The company opened its first U.S. store in 1976 in Iowa. It has grown organically without merger or acquisition, adding between 20 and 30 stores annually during its first 30 years in the United States. As mentioned earlier, it has added a couple of hundred stores to that total over the past three years. Aldi is ranked as the 25th largest retailer in terms of total sales in the United States.

For suppliers interested in opportunities in the firm's new Texas stores, the company directs firms to its supplier section on its web site, www.aldiussuppliers.com.