Across vast chunks of the globe, Aldi can do no wrong.
If it’s not in a country, customers plead for it to set up shop.
When it arrives, Facebook groups extolling its products spontaneously appear, it steals market share from established players and people go gaga for the special buys.
No country, it seems, is immune to the allure of Aldi.
Except Denmark.
Denmark is very much immune to the allure of Aldi.
So much so, that Aldi is currently in the process of closing or selling off its almost 200 outlets in the Scandinavian nation after losing close to a billion dollars.
What makes Aldi’s failure in Denmark perplexing is that it’s just across the border from its homeland of Germany. And to add insult to injury, it’s selling up to a supermarket chain that essentially admits it was inspired by Aldi.
“It’s unbelievable that large German Aldi is withdrawing from Denmark,” said Norwegian economist Odd Gisholt.
A textbook example of how Aldi has succeeded outside Germany is in Australia. Since it arrived in 2001, it has been a thorn in the side of Woolworths and Coles.
It has dragged customers away with claims of quality products at lower prices. A market share just shy of 10 per cent means it is now the third largest supermarket chain, pushing IGA into fourth place.
Much the same has happened for Aldi in the US, the UK and markets in Europe. It is now Europe’s second largest grocery chain.
Denmark must have seemed a no-brainer. North of Germany, the nation of six million was full of shoppers eager for good value groceries. Aldi entered the market way back in 1977, eventually amassing 188 stores from Copenhagen to Aarhus.
And yet it has a market share of a mere 3 per cent in Denmark compared to 30 per cent in Germany and 10 per cent in Britain.
In 2022, Aldi Denmark lost $128 million, a big increase on the year before, despite sales going up.
It’s thought it’s lost around 4 billion Danish kroner ($880m) in Denmark.
Bruised and battered, Aldi finally admitted defeat.
“After carefully examining activities in all markets, Aldi Nord has reached the difficult, but necessary decision to leave the Danish market,” said Aldi Denmark head Finn Tang in December.
The company said it would concentrate instead on “European markets, where Aldi experiences strong growth, creates better results and sees long-term potential”.
From ‘heaven’ to ‘hell’
Of its 188 stores, it has an agreement to sell 114 to Norwegian discount grocer Rema 1000.
The remaining stores will either be sold off or closed altogether. Around 1000 jobs are at risk.
Halfway through 2023, and Aldi has now shuttered around 60 of its Danish stores. It aims to hand the keys of the remaining 120 or so supermarkets to its one time competitors by the end of the year.
“Aldi Denmark has burned cash on a large scale, while Aldi Germany is a very profitable company,” wrote Reidar Molthe for NHH Norwegian School of Economics in 2021.
“It is quite strange that as fast as you cross the narrow border to Denmark, everything goes from heaven to hell.”
‘Bad reputation’
In 2021, Mr Molthe called for Aldi to pull out of Denmark.
“Aldi will probably never get payback at its Danish stores. The reputation is too bad to repair in the short run.”
It would take Aldi another two years to heed his advice.
“(Aldi’s Danish demise) shows, if nothing else two things: Retail is detail and retail is local,” he said.
That theory is borne out by comments online about why Aldi failed. A big bug bear was too many German or “German inspired” products.
Some shoppers thought that Aldi was just shipping products across the frontier – albeit with a Danish label – and paying lip service to Scandinavian tastes.
Too much sauerkraut; not enough rye bread.
Cuts deep for Aldi
Another issue was the complex ownership structure of family owned Aldi which is actually two separate companies – Aldi Nord and Aldi Sud.
Usually, only one Aldi company enters each country. In Australia, the UK and US, Aldi is actually Aldi Sud.
Aldi Sud’s strategy has been to keep prices low but otherwise improve stores and range to attract more affluent shoppers. It’s a plan that’s worked.
Aldi Nord, which ran Denmark’s Aldi, had a more traditional and basic pile it high approach. That plan failed to resonate with Danish shoppers. The stores had a reputation for being shabby.
“We have been in Denmark for 43 years, but we just must admit that for many years Aldi has not really modernised very much,” said Aldi Denmark’s communications head Kristian Jessen in 2020.
“Aldi had a bad assortment, messy aisles, outdated tech and unrecognisable products,” said one ex-shopper on Reddit.
“They just didn’t manage to adapt (despite being the first discount store in the country).”
And that fact has to be what will sting the most for Aldi; that it’s selling out to Scandinavian competitors who copied its – or more likely Aldi Sud’s – model.
Henrik Burkal, CEO of Rema 1000 Denmark, which is taking over most of the Aldi stores, openly said as much.
“Aldi opened in Denmark in 1977 as the first discount grocery chain and served as one
huge inspiration for our owner when he opened the first (Rema 1000) in 1979.
“Then it is with equal parts humility and pride that we are now allowed to carry the banner on.”
Not just Denmark where Aldi struggles
There are other reasons. Competition is fierce in Denmark with more supermarkets per person than the European average and lots of companies in the discount space.
Aldi is only the latest supermarket to raise the white flag there.
But it’s not just Denmark where Aldi struggles. In France, too, locals just don’t seem to be that excited by piles of cheap ski wear and garden furniture in between the cereals and veggies.
The nation’s shoppers appear to have a bias toward their own home grown brands.
But that wasn’t the issue in Denmark, which has a number of successful overseas based supermarkets, said Mr Molthe.
“Time and time again we see that it is not possible to make a blueprint in one market and implement it in another country.”
By the end of the year, Denmark will become one of the few nations which saw all the things Aldi had to offer – and said “no thanks”.
Or rather, “Nej tak”.