Thursday, March 23, 2023

"Aldi Faces Multiple Store Closings As The Retail Apocalypse Aggravates"

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"Aldi Faces Multiple Store Closings
 As The Retail Apocalypse Aggravates"
by Epic Economist

"With grocery prices shooting up to record levels amid soaring inflation, discount retailers like Aldi have become consumer favorites as shoppers struggle to stretch their dollars as far as possible. The popular grocery chain has seen demand ballooning over the past couple of years, but it hasn’t been immune to sharp increases in operational costs that ultimately led the company to raise prices on thousands of products. Now, sales are flatlining in many locations, supply chain problems are seemingly back, and the retail apocalypse is forcing Aldi to close up shop in many U.S. cities. The trend is accelerating far faster than economists have predicted, and a new report shows that over 1,000 retail stores are being shuttered across the U.S. as problems in the sector pile up.

Multiple chains just announced that they’ll be shuttering stores this summer, which means that your local hub could soon be gone for good. In recent weeks, customers have taken to social media to lament the loss of their favorite budget-friendly supermarket Aldi. This week alone, the supermarket chain is closing locations in Lower Burrel and Pittsburgh, Pennsylvania. The shutdowns came after it decided to close up shop in Fort Worth, Texas, and Minneapolis, Minnesota just a couple of weeks ago.

It’s evident that Aldi has not been able to survive the retail crisis unscathed, and reports released by retail blog Best Life reveal that the company is hinting that several locations in Florida, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New York, Ohio, and South Carolina could be next in the chopping block. Not long ago, the grocer also shuttered a very popular store in the Auburn Gresham neighborhood in Chicago, Illinois. An Aldi spokesperson said that the company's decision to close was "based on several factors, including repeated burglaries and declining sales."

Another problem raised by Aldi’s loyal shoppers is that in many stores across the country, they’re spotting a very limited variety of products on the shelves. Given that the company’s business model is very different from those of Costco and Walmart, it is not uncommon for Aldi to have less inventory than other retailers. But what shoppers are seeing right now goes beyond the occasional empty shelf.

Nowadays, Aldi doesn’t save me a trip to the regular supermarket, says shopper and Motley Fool’s contributor Maurie Backman. “I've found that Aldi's product offerings are not very consistent,” she continued. “There are some weeks when I'll stop in only to find that they don't have strawberries, or cucumbers, or another common product you'd expect to see at a grocery store. That can be a frustrating thing when you only have time to stop at one store.”

Inventories are seemingly so tight that now Aldi is imposing purchasing limits on some products to avoid stocks from running out. In a recent press release, the company said that it is limiting the purchase of tomatoes, peppers, cucumbers, lettuce, salad bags, broccoli, cauliflower, and raspberries to three of each item per customer.

With supply chain issues arising again, tighter credit conditions impacting the company’s finances, and the risk of systemic contagion from collapsing banks threatening the entire retail sector, the outlook is bleaker than it ever was. The economic downturn is likely to further damage sales rates and prompt brands to reduce their workforces even more as they concentrate only on the best performing stores. In the retail apocalypse, only the strongest will survive, and that means we might have to say our final goodbyes to our favorite brands sooner than we think."
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