A Personal Story on Disruption

I have done much reading over the last several months about disruption, and how it transcends many industries. For example, bitcoin has made a huge impact in the financial world, so much so, that Jamie Dimon has gone out on a limb in defending his beloved banking industry to say it is fraud. Or, how about digital wallets like Venmo, Zelle and Square looking to compete with banks by offering debit cards through Visa and MasterCard.

How about the disruption in the transportation industry with Lyft and Uber as these companies are being challenged by Waymo in the development of autonomous, self-driving vehicles? Or, the heavy competition in food delivery services between GrubHub, Seamless, UberEATS, and others.

There is disruption even among the big search engines, Google and Facebook, and ancillary disruption among other sites, especially as it relates to advertising, brand placement and other marketing strategies.

Then, there is the disruption in the most basic “commodity” of all, groceries. For years, we have relied on our local grocer to offer good quality and great service for a fair and reasonable price. Soon enough, wholesale warehouses, like Costco and BJ’s, began offering groceries as part of their inventory. The only caveat was that you had to buy in bulk. So, what happened? Walmart and other big boxes jumped onto the grocery bandwagon and tried to undercut your local grocer. Those who could not compete are now gone and the rest have become bigger.

Silently watching this was another entity named for a large river in South America (not really) who pounced this year on the largest health and organic food chain, Whole Foods. Many were concerned that groceries would become competitive, much like all the other cool stuff you could buy at Amazon.

But wait! Amazon is NOT the disruption force in the grocery business. Instead, two German companies, Lidl and Aldi, have made huge inroads in the grocery industry over the last year by offering quality products across all product staples, including cereals, paper goods, snack foods, fresh vegetables, dairy and meat, at greatly reduced prices.

There are several things I noticed when I went to my local Aldi which were not like other retail outlets: I rented a wagon for a quarter, and when I returned it, my quarter was returned. So no lot boy or girl running around getting carts. When you went inside, it was fairly utilitarian and sterile, with no extraneous signage or décor to distract you from your mission. The foods sold instore were not national brands and were produced to be distributed by Aldi, much like a store brand, for about 25% to 30% of the national brand price, and about 50% of a retail grocery store brand price. And I even saw organic items on the shelves.

There was someone nearby in each section of the store to assist customers with their purchases, or could at least explain why the product was not available. In addition, there was even a small section for non-grocery items, like basic tools and some toys for the kiddies. Of course, everyone knows that impulse-buy items have the highest mark ups, or as retailers like to say, IMU.

Then, when I checked out, the cashier packed my groceries in the bags I provided, cold or frozen packed together, with no frozen items packed with jars or boxes. There was no plastic bag rack or paper bags laying around at the counter. There were boxes strategically located in the store for convenience and a couple of racks where you could buy reusable bags for future purchases. Oh, and no lottery machines or other objects blocking your way out.

When I got home, I actually made something for dinner using the products I just purchased. And it was delicious. It tasted just like anything I would have purchased at Stop and Shop or Shoprite, or even the big box stores. In the end, it was food. And it was more than affordable.

There is a lesson here to be learned by your local grocer, the warehouse clubs and big boxes. And even by Amazon/Whole Foods. Disruption can be good when it benefits the consumer, not the industry. People are not stupid; they are tired of being taken advantage.

We are all looking for good quality, great service at fair and reasonable prices. Looks like Aldi has finally mastered that for the rest of the grocery industry to learn from.

Happy shopping!


Frank McHale is Chief Operations Officer at Madison Avenue Social  #WeEvokeEmotion