Retail Report: Aldi Accepts Credit Cards; NRF Takes on Patent Trolls

Aldi Now Accepts Credit Cards

German grocer Aldi has been making headlines in recent years for its innovative private-label brands, increased produce selection, and, most recently, entry into the Southern California market. The latest Aldi headline is perhaps the most significant one yet: Aldi now accepts credit card payments at all its stores.

Aldi has long been known for its cost-cutting quirks. Shoppers must make a refundable, 25-cent deposit on shopping carts, bring their own bags (or buy them at the store), and bag their own groceries. Stores are decidedly utilitarian, with many products being sold directly from the boxes in which they are shipped to the store. Aldi also previously had a policy of only accepting cash, electronic benefit cards, and debit cards for payment. No credit cards allowed.

But as the grocery industry becomes more competitive, Aldi has seen the need to make changes, particularly as it tries to attract Millennials and those who normally shop at more upscale markets for specialty foods (such as low-carb or gluten-free items). Aldi U.S. began testing credit card acceptance in 2014, announcing that all stores would accept Visa, MasterCard, Discover and American Express on March 1, 2016.

 “As Aldi continues to evolve by expanding its product lines and moving into new markets, the way we do business will continue to evolve as well,” Aldi CEO Jason Hart said, according to a press release from the retailer. “We care about being able to make our customers’ shopping experiences simpler and better every time they come to see us, and offering them the convenience of using their credit cards will help us do just that.”

By offering the option of credit card purchases, Aldi has positioned itself favorably in the current grocery market. By providing the healthy, specialty foods that consumers want at very low prices, Aldi has already attracted new customers who, not so long ago, might have turned up their noses at Aldi’s no-frills approach. Now Aldi is further extending its newfound appeal to those who prefer to use credit cards.

The National Retail Federation

Takes on Patent Trolls

The digital age is certainly one of opportunity. Unfortunately, some would-be entrepreneurs choose opportunism over legitimate, ethical businesses. One example of this is the emergence of modern-day “patent troll” companies, also known as non-practicing entities.

These businesses purchase the rights to obscure patents for very basic technologies and then proceed to sue other businesses for alleged intellectual property violations.

In late February, the National Retail Federation announced that it is asking Congress to take steps to address the issue of patent reform, making it more difficult for “trolls” to threaten and harass legitimate businesses.

While intellectual property law is certainly a complex area, and violations do exist, some of these so-called patent troll cases are blatantly obvious. For example, a major fast-food chain was threatened with a lawsuit by a patent holder because it included links to its website and social media accounts in its email promotions. According to the patent holder, this very common feature of email marketing campaigns is, in fact, a patented process.

The motivation for such litigiousness? Money, of course. According to the NRF, most patent trolls never actually win their lawsuits. The trouble is that court costs are often so high that businesses will settle rather than go through the hassle and expense of a legal dispute.

Unfortunately, this abuse of the legal system has a detrimental effect on both large and small businesses, as well as the development of new technologies.

In an NRF press release from Feb. 25, NRF senior vice president David French said, “Retailers who once engaged with small technology providers no longer invest in their innovation out of fear of increased litigation brought by patent trolls. Patent trolls have created a chilling effect on retailers’ incorporation of technology in their stores and online.”

The U.S. Senate Committee on Small Business & Entrepreneurship is currently investigating the issue in hopes of developing appropriate legislation that both protects intellectual property while preventing blatant abuses of the system.

Same-Day Delivery Becoming the Norm

Not so long ago, purchasing goods via “mail order” could mean a long wait. Those of us who were around in the 1970s and ‘80s can remember television commercials advertising kitchen gadgets and record albums that would arrive within six to eight weeks. As mail-order logistics improved, wait times shortened, but delivery estimates of several weeks still weren’t unheard of.

With the advent of e-commerce, delivery time still varied, though many major online retailers develop new logistic standards that made shipping faster and more reliable. Still, truly fast shipping, such as second or same-day delivery, wasn’t always available. When a retailer offered it, it was typically at a high cost.

Then back in 2005, Amazon introduced its Prime loyalty program. Members paid a flat fee of $79 a year and in return got free second-day shipping on a huge selection of products. If a Prime customer wanted next day shipping, he or she could have it for $3.99.

While Amazon’s decision to prioritize shipping speed seemed revolutionary at the time, two-day delivery seems slow by today’s standards. Amazon is offering free same-day delivery in several markets, and its Prime NOW service boasts free one-hour delivery, albeit with a suggested $5 tip for delivery drivers.

Other companies have got on the same-day delivery bandwagon, including several third-party services. Whole Foods recently signed a long-term contract with grocery delivery service Instacart, making Instacart the only sanctioned delivery service for Whole Foods customers. Like Instacart, Postmates relies on a team of freelance delivery people to ferry a variety of goods, including groceries and restaurant orders, to the homes and offices of busy consumers.

Even established delivery services are feeling the pressure to speed things up. Recent media stories reported that Amazon seems to be distancing itself from UPS as Amazon experiments with managing its own deliveries. Interestingly, UPS recently invested in same-day delivery startup, Deliv.

According to a recent Reuters article, Rimas Kapeskas, managing director of the UPS Strategic Enterprise fund said “We don’t participate in the on-demand business as much, and the consumer side of this is still a bit of a mystery to us.

“This is a rapidly evolving marketplace and we thought we could learn more by being close to it,” he said, according to the article.

These innovations point to the continued importance of logistics management for both retailers and suppliers. “Old” industry standards, even those established just a few years ago, are no longer good enough for today’s omnichannel consumer.