Why is Walmart so concerned about Aldi and Lidl?
Walmart knows a thing or two about Aldi and Lidl occupying the same market based on its experience in the U.K. and Europe. Perhaps that’s why The Wall Street Journal reports the world’s largest retailer is “bracing” for an increased level of competition in the U.S.
Aldi and Lidl have proven to be disruptive forces in the U.K. where the two hard discounters account for 11 percent of the grocery market combined.
In the U.S., Aldi has been aggressively expanding into new markets, such as California, while ramping up store counts in important states including Florida and Texas. The chain, which expects to have 2,000 stores nationwide by next year, is investing $1.6 billion to expand and remodel 1,300 existing stores.
Aldi, according to Reuters, currently accounts for just 1.5 percent of the U.S. grocery market, but has seen its sales double over the past five years..
“We are re-merchandising, remodeling, enhancing our product range and are focused on gaining volume so more customers start their shopping at Aldi and we are able to complete their shopping lists more so than we have in the past,” Aldi CEO Josh Hart told Reuters.
A separate report by the news service in February disclosed that Walmart had conducted a price test covering 1,200 stores in states across the Midwest and Southeast. Market basket checks in Illinois and Iowa found Walmart had “consistently” lower prices than Aldi. Previous analyst findings put Aldi’s prices about 20 percent lower than Walmart’s.
Lidl plans to open 20 stores this summer in the Carolinas and Virginia. The chain, which plans to open 100 stores in East Coast states during its first year in the U.S., was not expected to begin opening locations until next year. Reports by The Dallas Morning News and The Plain Dealer have Lidl eyeing locations in Texas and Ohio, as well.
Kantar Retail projects Lidl’s store count will reach 630 with total sales of $8.8 billion by 2023. That’s more than the $8.1 billion Wegmans will do this year.
- Why Wal-Mart is Worried About a German Discount Grocer – The Wall Street Journal
- Aldi raises stakes in price war with Wal-Mart – Reuters
- German grocer Lidl is quietly buying up land in North Texas – The Dallas Morning News
- German grocery giant Lidl confirms plans under way to check out sites in Ohio – The Plain Dealer
- Can a former Lidl CEO transform Save-A-Lot into a major player? – RetailWire
- Will Walmart’s price push pull customers away from Aldi? – RetailWire
- Will Aldi and Lidl replicate U.K. success in the U.S.? – RetailWire
DISCUSSION QUESTIONS: What does Walmart know about Aldi and Lidl that has management so concerned about their expansion plans in the U.S.? Do you think other grocery store competitors are similarly preparing for disruption of the market brought on by the two hard discount chains?