German discount grocer Aldi has affirmed it is in position to move ahead with its plan to open 45 Southern California stores in Southern California, and that appears to be just a start.

Aldi, with roots in the Chicago-area suburb of Batavia, could change the face of the Inland Southern California supermarket landscape: It is known for gaining a loyal following – fast – with deep discounts, a do-it-yourself shopping approach and an emphasis on putting products that sell the most on the shelves.

Most are private-label items bought in big volumes.

Industry analyst David Livingston said Aldi forged trails across the Midwest decades ago as a discount grocery pioneer.

“They don’t vary the format,” Livingston said. “It’s pretty much cookie-cutter. They will be the lowest-priced grocer: No one can touch them.”

The company that began opening small-format stores in urban areas, typically positioning on the outer fringes of Kmart-type retail centers to sell bag-your-own groceries from shipping boxes, crates and pallets at competitive prices in 1976 became so popular its clientele could be seen rolling shopping carts with merchandise to their house.

Aldi introduced a keyed cart to keep their rigs in tow.

Today, Aldi has a cache of more than 1,400 stores in 32 states. The company employs more than 19,000 people.

Liz Ruggles, an Aldi spokeswoman, said the stores will open in the counties of Riverside and San Bernardino, San Diego, Imperial, Orange, Kern and Ventura. The Aldi expansion to California is part of a five-year plan to open 650 stores across the nation.

The company is investing $3 billion in the expansion plan, according to Ruggles.

The first 26 stores for Southern California will open between March and July 2016, Ruggles said. That’s about the time the company plans to open a 935,000-square-foot warehouse and regional Aldi office suite that’s under construction in Westridge Business Park of Moreno Valley.

Ruggles declined to reveal specific store locations.

However, Yucaipa city officials in December 2014 already gave Aldi the green light to open an 18,552-square-foot grocery within the Chapman Heights Planned Development at Yucaipa Boulevard near Sixth Street. Site work by Aldi has already begun, Yucaipa contract planner Jim Morrissey said.

“From what we’ve heard, the reputation is pretty good,” Morrissey said. “They do things a little differently. They offer a good level of products and they try to keep the cost down. At the very least, this is a store that will give people options.”

Jacob Acuna, of Van Nuys, said he thinks the Aldi formula to sell roughly 1,300 of the most commonly purchased grocery items at a savings of up to 50 percent without the hassle of clipping coupons or buying in bulk will play well in Southern California.

“Not everyone can afford Whole Foods,” Acuna said as a relative picked up sun-dried tomatoes at a Food 4 Less in Riverside.

“People will go where they can get a great deal and good quality food,” Acuna said. “It’s as simple as that.”

But industry watchers here think Aldi may need to step gingerly: The British-owned Tesco failed to understand the Inland Southern California market, and failed miserably with a collection of smaller stores that emphasized high-quality, pre-cooked convenience foods fit for singles, new couples and small families.

After Tesco lost roughly $2 billion on the chain, Yucaipa Co.’s Ron Burkle bought the Fresh & Easy chain and moved deftly to close poorly performing stores.

Livingston said the problem with Fresh & Easy was its timing and store locations.

The company followed new rooftops to roll out the grocery line, and when the housing bubble burst, so did the sales. Many of the new stores opened just as the economy tanked. Fresh & Easy produce and food was also pre-wrapped, and, Livingston said, Tesco failed to predict the ingenuity of the consumer.

“They waited for the goods to expire, so they could buy it at a reduced rate,” he said. “I think you’ll see Aldi be much more selective on their site locations.”

One dynamic Livingston said the market will see will be moderating prices among competitors.

Aldi will be squaring off against long-established grocery providers the likes of Costco, Winco, Food 4 Less, Stater Bros. and Sam’s Club.

Jack Brown, chief executive of the Stater grocery chain, could not be reached for comment. And a company spokesman did not return a call. But, if the company’s jingle is an indication, Stater Bros. is already reminding consumers on the home front of its “money-saving” ways.

“You get more for your money shopping the Stater Bros. way,” the country-styled jingle says in a tape recording that’s played when folks call.

Aldi is controlled by the Albrecht family in Germany. Its stores are different than traditional grocery stores in that the environment is functional in tone, and the shopping area considerably smaller.

The stores generally have five aisles in about 10,000 square feet of retail selling space, Ruggles said. A traditional store, typically 50,000 square feet, carries 30,000 to 40,000 products under a variety of labels.

More than 90 percent of the Aldi items sold with private, Aldi brand labels that include an exclusive SimplyNature line or organic foods and liveGfree brands of gluten-free foods. Each store offers 1,300 items, but typically carries only one or two options for common grocery items like peanut butter.

The stores in California will carry close to 100 farm-fresh fruits and vegetables from regional and local suppliers, Ruggles said. “Stores that carry wine and beer will have an expanded wine selection.”

Acuna said the competition should help shave prices at other stores, or keep food prices from rising locally.

“Our wages haven’t gone up much here,” he said. “Anything that helps meet the family budgets will be a good thing.”

Though Livingston says consumers may see some price wars occurring, he doesn’t think other markets are in jeopardy. Delis and bakeries and meat counters are not part of the equation. Aldi leans heavily on the private-label category, he said.

So how does it compete?

It’s with low overhead and solid regional positioning, Livingston said. Aldi has some of the highest sales per man hour in the U.S., roughly $500 per man hour, he explained. That compares to the conventional rate of $150 to $250 per man hour. “Aldi’s staff is incredibly productive,” he said. “And they all work incredibly fast.”

Aldi’s expansion here was announced in June 2013. That’s when the mega-warehouse and regional headquarters along Highway 60 was announced and construction began in earnest.

About 1,100 people will be employed in the Southern California stores, as well as the company’s regional headquarters and warehouses by the end of 2016, the company said.

A news release distributed Thursday, June 11 by Aldi said the company is offering starting wages of $13 per hour for store associates. Long-standing associates can earn up to $21 per hour. For Moreno Valley warehouse associates, Aldi offers a starting wage of $19 per hour; and an opportunity to work up to $26 per hour.

See a related story from June 2013: http://www.pe.com/articles/aldi-679073-city-moreno.html

Contact the writer: 951-368-9423 or dgruszecki@pe.com