For years, Aldi’s U.S. presence was seen as unthreatening to the traditional supermarkets, but the German discount giant quietly played its cards right and turned itself into a trojan horse that has other stores scrambling to compete, leaving their stock prices tumbling.
Aldi’s strategy has always been to keep prices as low as they could, and it was a strategy that paid off when the economy took a nosedive in 2008. As a result, other grocery chains have taken a hit, including Whole Foods, Kroger and even Walmart, who’s prices recently averaged 30 percent higher than Aldi. Even popular dollar stores have felt the sting, including Dollar General.
“[Aldi and Lidl] predators crossing the pond”
All of these stores have announced, or implemented, deep price cuts on popular grocery items in the hopes that it will get customers back in the door, and they want to win back customers before another German discount giant, Lidl, starts its own rollout of up to 150 stores by 2018.
In a research note published back in April, Deutsche Bank analysts referred to the two German stores as “predators crossing the pond,” and that “all retailers need to treat Aldi (and at a later date Lidl) as a meaningful threat — and to be dismissive will likely prove to be a tactical/strategic error”.
While Lidl is set to put pressure mainly on east coast chains, Aldi has announced a $3 billion expansion over the next two years to add 500 more stores in the U.S. The two will surely continue to be a force to reckon with in the coming years, and the major players know it.