Walmart has a new competitor to worry about Add New Topic
- June 13, 2017 at 2:16 pm #16338WillieeArmelliniKeymaster
Walmart has a new competitor to worry about — and this time it’s coming from overseas.
Aldi, a Germany-based chain whose supermarkets offer deep discounts on a selected assortment of groceries, announced big expansion plans Monday, saying it will spend $3.4 billion to enlarge its chain to 2,500 stores nationwide by the end of 2022.
That’s up from the current tally of 1,600 stores across 35 states, which Aldi has quietly amassed since it first entered the US in 1976.
Aldi says the planned growth spurt will make it the third-biggest US supermarket behind Walmart and Kroger, serving 100 million customers per month.
Walmart, which currently is the No. 1 player in the $800 billion US grocery market, with a 17 percent chunk of the total, will have to invest $3 billion to $5 billion over the next five years to maintain the lowest grocery price.
That’s according to Brittain Ladd, who has advised retailers — including Amazon — on strategy, supply-chain management and groceries. He has also has been studying Aldi since 2008.
“Aldi is gunning for prices 21 percent below competitors in the US,” Ladd told The Post, saying his big-dollar spending estimate is what will be required for Walmart to “defend market share” in groceries.
Aldi sells mainly private-label groceries and focuses on the top 20 percent of supermarket product lines that generate 80 percent of sales, according to Ladd.
As such, Aldi stores average just 12,000 square feet, versus 50,000 square feet and up for traditional US supermarkets like Kroger.
“A weakness in its discounter model is that they sell many fewer items than traditional grocery stores, requiring customers to shop at more than one retailer for all of their grocery needs,” he notes.
Nevertheless, Ladd says that, when he worked for Amazon, he stressed the importance that the Seattle-based Web giant’s AmazonFresh grocery unit not underestimate Aldi.
A similar German discount supermarket chain called Lidl has announced it is opening the first of 100 US stores this week, promising prices as much as 50 percent lower than the competition’s.
Presently, Aldi does not handle food deliveries, but that could change soon, Ladd asserted.
“I expect that Aldi will invest in e-commerce and duplicate their discount models online at some point in the near future,” he said.
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