By Pia Fuglsang Bach, September 2019
Freshly baked ciabatta, organic fruit and vegetables, plus a couple of ritter sport bars. That was what ended up in the basket when today’s groceries were recently set aside at Tingvej 2 on Amager. The organic raisins were unfortunately sold out, but they would be available in the store the next day, explained the friendly young worker.
For a woman who had not set foot in an Aldi store since the discount chain was known for its long-life milk, the visit was a pleasant surprise.
The store on Manager is one of the chain’s newest, and in many ways it is a model example of aldi denmark’s goal of fresh products, attractive stores and clear communication.
These are three of the five must-win battles that Aldi Denmark's top management formulated in collaboration with cfl. The other two are unique nonfood items and a winning culture.
Together, these five focus areas are meant to secure the CEO's mission of making every day even better. They are intended to help Aldi shift from loss to profit within a short period of time.
We will come back to that later.
At the helm is finn tang, ceo of aldi denmark since september 2017. cfl met him at the headquarters in Albertslund, and one of the most pressing questions was:
What on earth made you decide to take the top seat in Denmark's most dust-laden discount chain?
“I love challenges. I love winning,” said the top executive, quickly adding that no one can do it alone – and that he obviously wants to win together with his team.
“i looked at a company that, in essence, had a good concept and strong dna, but wasn’t managing to get it off the ground. When the opportunity presented itself, it was too exciting to say no to trying to make aldi a success in denmark, especially when lidl had already succeeded,” says finn tang.
Finn Tang
CEO of aldi denmark since 1 september 2017. Previously, he served as ceo of lidl denmark – building the chain from being the first employee to over 2,000 employees. He was CEO at Lidl Denmark for 15 years.
I was looking into a company that essentially had a good concept and strong DNA, but failed to get it off the ground.
It is neither bragging nor grand gestures that characterize finn tang when you first meet him.
as a top executive, he appears measured and thoughtful. Yes, he is a businessman with deep insight into the details and a natural fondness for the sounds of the cash register, but he is also analytical and strategic. and perhaps that is exactly what is needed to revitalize the Danish discount market, as he himself states.
The primary competitors are the other discount chains in Denmark – namely lidl, rema, neto and fakta – but according to finn tang, aldi denmark’s great strength is its european network.
“The support from behind is part of aldi’s dna, and it is clear that you can create far greater synergies when you buy for the european market than when you operate purely as a danish player. this applies to quality and price, but also to csr – especially when it comes to staple items such as pasta and chocolate,” says Finn Tang.
He summarizes Aldi's strengths in three points:
You can always take a study trip and see what happens in a dutch store, but I have my colleagues right there in the market.
“I can, for example, get direct access to a Spanish supplier which we might use to differentiate ourselves in the Danish market. Danish consumers want the same things they can get elsewhere – and preferably cheaper – but they also want to be surprised,” says finn tang, pointing out that it has also been important to build a strong Danish organization with the right Danish suppliers.
“What makes a chain attractive – also when we look to the future – is that we can offer what Danish consumers want. "We used to tend to focus on what was good for Aldi, but we must acknowledge that it has never really caught on in Denmark," he says.
Aldi has previously made its mark with special offers in nonfood, but that was something consumers might only buy three times a year. that did not generate the necessary traffic, and that is why today fresh products and bake-off are huge competitive advantages.
Most people buy fresh products three to four times a week, so why shouldn’t they shop at Aldi? finn tang asks rhetorically.
“In our stores, we have a huge focus on fresh products. not at the expense of nonfood, but we must be better than others at having processes that train the staff. Here too, we can draw ideas and knowledge from across europe,” says finn tang, giving an example:
The Dutch have developed a great concept for selling fresh flowers. We haven't been very good at that, so what can we learn from them? We need to improve our benchmarking, knowledge transfer, and best practices – whatever you call it. This applies at all levels, and also across the Danish regions.
CEO of ALDI Denmark since September 1, 2017. Previously held the position of CEO at Lidl Denmark, where he led the entire build-up of the chain: from being the first employee to over 2,000 staff. Served as top executive at Lidl Denmark for 15 years.
Aldi Denmark belongs to the Aldi Nord group, one of Europe's leading retail companies represented in nine countries. The group is German-owned with roots in a more than 100-year-old merchant tradition. The first Aldi discount store opened in the industrial town of Dinslaken in 1962. Germany remains the largest market with about 2,500 stores and a customer base of over 80 million. Aldi was the first true discount chain in Denmark, with the first store opening in 1977.
The 2018 financial report for aldi denmark revealed declining turnover and a loss of 381 million dkk, announced in late may 2019. Over the past eight financial years, Aldi Denmark's losses have totaled nearly 1.9 billion do, with the 2018 loss being the largest yet. finn tang says, the result is not satisfactory, but it is a long and extensive journey that we are on, so it comes as no surprise.
Finn Tang is a top executive who knows his market. He knows what it takes, but he was clear from the beginning that top management did not have the resources to drive the extensive change process on their own. The choice fell on cfl as an advisor.
“I have previously worked successfully with one of cfl’s current key employees. in addition, cfl presented a strong concept, and that is pretty much what we have followed ever since,” says finn tang.
It was, in its simplest form, about translating finn tang’s mission for aldi into reality: to make every day even better.
Simplicity should not be confused with ease, but nevertheless the leadership task was to translate the mission into simple messages and concrete action plans.
This brings us back to the five must-win battles:
“With everything we initiate, we ask ourselves: does it actually live up to one of our five must wins? For example, does a given project or new initiative make our stores more attractive?”
“If not, perhaps we should drop it. in a world where something new happens every hour, things can easily get out of hand – so it really comes down to prioritization,” says Finn Tang.
“No one can remember everything, but together with cfl we have worked a lot with sub-goals and smart goals, and they have truly started to resonate with our employees,” he says.
Smart goals refer to concrete plans and targets for the individual employee. They also serve as a dialogue tool between employees and the leader: what will the employee accomplish? which of the five focus areas does it relate to? What is required? Who should be involved, etc.?
The five must-win battles are grouped under the headline “fix the basics” and exist alongside other tools and values, including:
This would be too lengthy to detail fully, but the three core values are simplicity, accountability and reliability. These values are universal, and as finn tang states, they are values that most – even outside of Aldi – can subscribe to, with simplicity being the most central.
“In a company like ours, we don’t earn much on each individual item, so volume is very important. Therefore, it is crucial that we incorporate simplicity into all processes. it’s about everything from logistics to paperwork to it. where can we eliminate manual processes and use the time for something else?”
“Simplicity also applies to us at headquarters. We must ensure that the employees in the stores excel at what they do.”
“We need to be sharp on our product range, store network and people. The latter is the most important, because if our employees do not succeed, even great products and attractive stores won’t help,” says finn tang, noting that aldi only established an hr department after his arrival.
It is a well-known, yet extremely challenging, leadership discipline to translate a new strategy into concrete action plans. simplicity should not be confused with ease, but the task here was to translate the mission into clear messages and concrete plans.
Cfl adds that it is a tremendous achievement when the changes are implemented while the company is in full operation.
The truth is, Aldi has undergone a gigantic turnaround, where everything from organization to stores to product range is at stake. finn tang himself does not use the term “turnaround” – nor “burning platform” for that matter.
He speaks of revitalizing Danish discount, of change management, and of creating a new culture.
“internally at headquarters, we use the term change management. we have employees who have been at Aldi for 20 years, so how do we get everyone on board – both in the stores and at headquarters?”
“not everything we did yesterday was wrong. Perhaps the building blocks were there, but they were assembled incorrectly,” says finn tang, emphasizing the importance of commitment.
“it is difficult to drive change quickly while ensuring that concepts do not remain merely as fancy words and attractive posters. How do we secure commitment from people, even when management has stepped aside?”
In finn tang’s view, it requires a cultural change – but also speed.
“When you look at our bottom line, things have to move quickly. There is no time to lose.”
Danish consumers want the same things they can get in other stores — preferably at a lower price — but they also want to be surprised.
Finn Tang knows that his success depends on whether he can turn losses into gains – but he wants much more.
He wants to revitalize Danish discounts, and that should not be achieved merely by lowering milk prices. He wants people to reconsider Aldi. That requires customers in the store – preferably new ones.
“People must reconsider aldi. they should not rule us out in advance because they or their neighbors had a bad experience 40 years ago. Historically, we have disappointed customers, and that is our challenge,” says Finn Tang.
50 of Aldi's 180 stores have been renovated and now follow a new concept. 130 have received makeovers, but they are not future-proof. They may need to be expanded or relocated, and in the long term the chain should have a total of 240 stores.
“In principle, we are to establish 190 new stores, and there is, of course, a big difference between a customer walking into a new versus an old store. Our challenge is how quickly we can launch the new stores,” says the top executive, referring to external factors such as local planning and the willingness of municipal councils.
He has also strengthened his team by adding a property director to the current 11-person management group.
Finn Tang began his first day at the Danish headquarters on 1 January 2018. Before that, he spent time on field studies, primarily abroad but also in Danish stores.
At the beginning of 2018, there were 45 employees at the headquarters managing a turnover of 3.5 billion dkk. There was no HR department and no central sales team.
“It is not in itself a success to have many employees at a headquarters. On the contrary, it can be counterproductive. but if you are to make it easy for the employees in the stores and the three central warehouses, we have to centralize some functions,” says finn tang.
Today, there are 110 employees, and Aldi continues to plan for professional units at the headquarters to support and simplify operations in the revenue-generating stores.
Aldi is also in the process of establishing an analytics unit to monitor customer behavior.
“For example, we have a slogan about capturing young customers. That is not wrong, but what exactly are young customers? some earn 15,000 dkk a month, others 50,000 dkk – they represent very different target groups,” he explains.
“Therefore, we are strengthening our analytics department to deliver data to sales and marketing and to form the basis for data-driven decisions,” says Finn Tang.
There is no doubt that finn tang tends to rely on data and thorough analysis before taking action. That is probably one explanation for why his own leadership team has only recently come together – in the fall of 2019 – including a new deputy ceo.
“The team I inherited has largely helped define what we are doing, but some people have also dropped out. it has been an ongoing process, partly because we are a small organization that needed extra strength,” says Finn Tang, adding:
“I have a mantra that says we must develop our employees, and if someone does not want or cannot develop, then for the common good they must be let go. it may sound a bit harsh, but I truly believe it is the best approach for everyone.”
Aldi can offer Danish consumers more competition, but above all a revitalized discount market. Therefore, according to finn tang, denmark needs aldi – but what does the owner, aldi nord, want with aldi denmark?
“There is a need for groceries everywhere, and when a concept has proven sustainable elsewhere in Europe, why not in Denmark?"
“And we have an owner who is just as passionate about the cause as I am. Aldi Nord is the inventor of discount – also in Denmark, where we have 42 years of history. It may be too much to say that it obliges us, but it is in our DNA that we want to move forward. The owner would rather invest in development than in bricks,” says Finn Tang, adding:
“Our owner, of course, believes that he will eventually profit from the strategy we have laid out. Perhaps not tomorrow, but in the long term. The building blocks are there. Now they just need to be assembled correctly, and over time, a few extra pieces might be added.”
“If we don’t succeed, it won’t be because of the capital. It will be because we aren’t skilled enough.”
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