Aldi Boosting Reputation with Refurished Private Labels

(MoneyWatch)  Aldi is reconfiguring its private label line up, streamlining the number of the own brands it operates to boost their reputation and the reputation of the store.

And it's doing so just in time to open its 1,000th U.S. Aldi store, which debuted two days ago in West Haven, Conn. The private labels and the store are inseparable because 95% of the products sold there are house brands, and right now there are 118 of them, noted Aldi spokesperson Martha Swaney. The company will review all 118 and determine which are relevant to the customer and performing to an acceptable standard. Relevance is important because, given the proportion of private label items Aldi carries, how consumer feel about its brands pretty much adds up to how they feel about the store. While she wouldn't provide specifics about which brands are safe and which are on their way out, Swaney did suggest that some, particularly those that Aldi has recently upgraded or introduced to a positive consumer response, can rest easy on their shelves. They even provide an indication of what the company is looking for as it reworks its private label line up. The upgrades include Fit & Active, a line of better-for-you products that offers nutrition and health information right on the front of the box. Fit & Active includes 58 core items, some in multiple varieties that bring the total items offered up to 121. The company also will rotate 20 special items into and out of the line seasonally.

A transfer developed originally in Britain, Lacura is a new introduction in the United States meant to offer quality on par with brands such as Helena Rubinstein, Olay and L'Oreal, but at prices up to 95% less than what they charge, Swaney said.

While Aldi might be a bargain-oriented store, anyone who doubts its ability to develop any item to exacting standards should remember that the concern that ultimately controls it, ALDI Group, has gained international renown for its product development capabilities and is the same one that controls Trader Joe's.

Aldi stores, until now, have stocked so many different private labels brands because they carried to the United States an own-brand strategy from their European home turf. Offering a splashy assortment of private labels, each emphasizing a particular product attribute, is a traditional method of reaching consumers there.

Swaney said Aldi "really wants to clarify our brands for customers and build familiarity."

Aldi's new angle on private label falls in with the strategy applied in the United States, where retailers generally limit themselves to one or two own brands for each major product category. Sometimes a single private label will cover a range of product categories, as is the case with Costco's Kirkland. Or Trader Joe's, which plunks its name down on all kinds of products from beer to chicken vindaloo. Underlying the U.S. strategy, no matter what the retailer, is building the brand's reputation with consumers and then using it where applicable so shoppers are always comfortable about the quality level they can expect.