Wednesday, February 21, 2018
Business

Grocery wars escalate: Discount Aldi unveils expansion plan to reach 2,500 U.S. stores by 2022

It already has 1,600 grocery stores in 35 states. On Monday, Germany-based Aldi announced it plans to add 900 more across the United States to bring the low-cost supermarket chain to 2,500 by 2022. Along the way, it will add 25,000 U.S. jobs, the company says.

Aldi, whose U.S. headquarters are in Batavia, Ill., is upping the stakes in the ongoing grocery wars in this country, committing a new round of $5 billion in investment to expand over the next five years. Aldi entered the Tampa Bay market in 2008 and now operates 17 stores here, and a total of 107 so far in central and southern Florida. Aldi says many of existing stores will be remodeled and expanded.

Aldi's press release captures the company's mission. "Aldi continues to disrupt the U.S. grocery industry by providing customers with a smarter way to shop."

Such an aggressive growth strategy means Aldi will be on track to becoming the third-largest food retailer in the country by store count, behind the larger Wal-Mart Stores Inc and Kroger Co. and a growing threat to traditional food retailers. Publix, the highly successful No. 1 grocery by market share in Florida, operates just under 1,200 stores across the southeastern United States.

Aldi hopes to do here what it has done so far in Europe — watch its market share steadily grow while traditional supermarkets see theirs shrink.

The key? Cheaper pricing. When it first entered the Tampa Bay market nine years ago, Aldi claimed prices of about 15 percent below Wal-Mart or Target Supercenters offered in smaller-sized stores — typically 16,000 square feet and six aisles — with limited assortments.

A recent report from consulting firm Bain & Co. forecasts deep discount chains will grow in this country by up to 10 percent a year through 2020,. That's five times the rate of traditional grocers.

Aldi, brandishing the slogan "Simply Smart Shopping," relies heavily on its store brand goods to offer lower-priced fare. Traditional grocery chains argue comparisons with discounters on price are difficult because they stock name-brand goods that Aldi does not carry.

"We're growing at a time when other retailers are struggling," Aldi CEO Jason Hart stated. "We are giving our customers what they want, which is more organic produce, antibiotic-free meats and fresh, healthier options across the store, all at unmatched prices up to 50 percent lower than traditional grocery stores."

Experts point out it's no coincidence Aldi unveiled its expansion plan days before another German discounter, Lidl, is set to open its first ten U.S. stores on the East Coast as part of a multiyear expansion. Lidl, whose stores are similar to Aldi's, anticipates 100 U.S. stores by mid 2018 and a rumored 600 more down the road.

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