Kantar: 'Aldi and Lidl could end up being a one-two punch in the US over the next several years'

Speaking to FoodNavigator-USA after ALDI unveiled plans to pump $1.6bn into remodeling and expanding 1,300 stores by 2020​​, Mike Paglia, director of retail insights at Kantar Retail Americas, said: “I think the investment is a wise one. When you get to be as big as Aldi (1,600+ stores) it becomes critical to keep them all fresh and up to date.​

“The remodeled stores are going to look a lot like​ [its] new locations and they are real eye openers for the shopper,” ​he said, referring to the use of sleek exposed concrete and softer lighting (Business Insider likened it to Whole Foods’ store design​).

Adding to the cosmetic facelift, Paglia says Aldi will also stock “more high quality produce [and] ‘better-for-you’ items throughout the store,” ​building on the company’s ongoing efforts to discard the ‘subpar quality’ assumptions that mar discount-priced products and store-brands​, “all while maintaining the low price image and the quick, easy, and stress free experience.”​

Watch out Walmart, Lidl is coming to town…​

ALDI’s announcement comes at a time when its European rival, Lidl, has been ramping up its US operations​, aiming for first store openings on the East Coast at the end of this year (it has already set up a US HQ in Arlington VA​, and is building three US distribution centers, including a $100m one in Maryland​).

Part of the Schwarz Group, the largest retailer in Europe and one of the largest in the world, Lidl - like ALDI - keeps prices low by offering a limited range (SKU count) and a strong private label offer, although it also stocks some national brands.

So what can the US grocery industry expect when the two German giants—a bigger, badder ALDI and fresh newcomer Lidl—continue their face-off stateside?

“Aldi and Lidl could end up being a one-two punch here in the US over the next several years. Certain retailers will definitely feel the impact more than others,”​ Paglia said.

“Specifically, those that are more conventional and less differentiated (e.g. Food Lion), or intensely focused on low prices (e.g. Walmart) will probably face greater pressure than current market leaders whose value proposition helps them stand out (e.g. Publix),”​ he added.

Further reading:

• ALDI unveils $1.6bn store remodel plan; Whole Foods axes 1,200+ store goal​​