Aldi and Lidl, two German discount grocery businesses are invading the U.S. with competitive prices. The stores don’t offer too many products, but what they do offer is priced at rock bottom.
NPR details how the German stores are expanding in America:
Competition has been intense among U.S. grocers. Companies are trying to figure out the role of technology in our shopping habits, and Amazon is ever the elephant in the room, now in possession of Whole Foods. And the pressure to compete on price is always there. In fact, prices have been falling quite a bit. Analysts often cite two major factors: a long period of food deflation, and stepped-up competition from Aldi and Lidl.
Aldi is an old-timer that’s been in the U.S. since the 1970s, approaching 1,700 stores. The company has now pledged $5 billion to renovate existing stores and grow to a total of 2,500 locations by 2022 — which would make it second only to Walmart and Kroger.
Lidl began spreading along the East Coast in June, reaching 30 storefronts in mid-September. It aims for a total of 100 by mid-2018 — presumably expanding further, if at a slower pace, after that.
Both stores are known particularly for private-brand, or store-label, products. Jim Hertel, senior vice president at food retail consultancy Inmar Willard Bishop Analytics, says that allows these grocers to offer customers savings of about 35-40 percent compared with other supermarkets. A limited stock goes into these discount stores, which are very compact and value efficiency above frills.
Some industry watchers predict that over the next few years, the deep-discount-grocery business will grow five times faster than traditional stores — in part because Americans are becoming more comfortable with private-brand groceries.
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