Discount Grocer Aldi Opens First Manhattan Store in East Harlem

By Jeff Mays on October 1, 2012 3:30pm 

EAST HARLEM — It didn't have the pizzazz of next door neighbor Target's grand opening, where Jerry Seinfeld and Russell Simmons walked the red carpet, but a line of eager customers was waiting outside at 9 a.m. Monday when discount grocer Aldi opened the doors to its first Manhattan store at East River Plaza.

"The prices are very reasonable and you don't have to buy in bulk," said Joseph Salerno, 63, who was one of the first customers in the store. He was there to pick up items for a senior group he works with through his church.

"Where else am I going to get a quality broom for $5.99?"

The German retailer operates more than 1,200 stores in the United States mostly in the Midwest and Northeast. The store is owned by the same parent company that owns specialty grocer Trader Joe's. The opening of the 17,000 square foot store on East 116th Street in Harlem drew a host of shoppers Monday, including Acacia Thompson, 36, a graduate student, who arrived with her 2-year-old son, Lennox.

"The prices are good and we don't have a lot of options in this neighborhood, but there is so much naughty food here," said Thompson. "There's a lot of processed food that's probably not good for people in this neighborhood with the rates of diabetes."

Thompson said she was relieved when she saw a produce section in the store that sold carrots, bananas, lettuce and onions among other fruits and vegetables, but that the overall product selection could be healthier.

"I would still like to see more fresh groceries," she added.

The store has hired 30 employees, most of whom are from Harlem and the Bronx, said Bruce Persohn, vice-president of the Aldi's division which covers the northeast. Cashiers start at $12 an hour and managers in training make $25 per hour.

The company has been rapidly expanding in the United States. Last year, it opened 75 stores in the United States and plans to open 80 more this year. The company opened its first New York City store in Rego Park in February 2011 and another in the Bronx in December. A store on Nostrand Avenue in Brooklyn is expected in late 2013.

Kat Fay, senior retail analyst at Planet Retail, said the company's 7.5 to 8 percent growth rate in the United States is double that of other market retailers.

"They concentrate on everyday low pricing and they have their own following and own niche," said Fay.

Aldi keep prices low by purchasing in bulk from food suppliers and making their own Aldi brands. Approximately 95 percent of the products in the store are sold under Aldi's brand labels. The store carries a tight selection of 1,400 products with occasional special buys from national retailers and seasonal items such as pumpkins.

They also operate Spartan stores where customers are required to deposit a quarter in order to get a shopping cart. They get the quarter back when they return the cart, freeing employees from having to spend time tracking the carts.

"What we've learned is that everyone likes to save money," Persohn said. "Everyone likes higher quality products at low prices."

David Livingston, a supermarket analyst with DJL Research, says Aldi's expands only when they have the cash to do so. They have low overhead because they don't have union labor or accept credit cards. Aldi employees are also more efficient than the competition.

"They do love to go near big box stores because they draw a lot of people to the shopping center but the box stores can't compete on price," said Livingston.

"When people start to shop at Aldi's they are going to realize prices are so much lower and there will be sticker shock when they go back to the other stores they shop at," he added.

That spells trouble for other national grocery chains such as Pathmark, which has two locations in Harlem, including one on 125th Street and Lexington Avenue in East Harlem.

"They do get a cult following with their clientele," Livingston said.

Carol Dessaso, 66, a retired home health care aide, said the box of toasted oats cereal in her cart was $1 less than the store where she normally buys them.

"I'm on a fixed income with Social Security so I have to find ways to make ends meet," said Dessaso who also has a membership at the Costco one floor below and looks for bargains at the Target next door. "Costco is better if you have a big family and can buy in bulk."

Vernaie Bueford, 63, a retired homemaker who described herself as a practiced comparison shopper, said she was pleased with the quality of the items she taste tested in the store as well as the prices.

"I like everything I've got in my cart so far," she said. "I might be back."

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