Will anything slow Aldi and Dollar General’s roll if COVID-19 didn’t?
The pandemic isn’t slowing down Aldi’s or Dollar General’s ambitions in the grocery space.
In mid-July, Aldi announced plans to open 70 stores this year, including an entry into Arizona. In 2017, the German-based limited-assortment grocer set a goal of becoming the third-largest U.S. grocer (behind Walmart and Kroger) by 2022 and recently surpassed its 2,000th U.S. store.
In a statement, Aldi committed to a total capital investment of $5 billion in new and remodeled stores in the U.S. over the next five years.
“We’re growing at a time when other retailers are struggling,” said Jason Hart, CEO, Aldi USA. “We are giving our customers what they want, which is more organic produce, antibiotic-free meats and fresh healthier options across the store, all at unmatched prices up to 50 percent lower than traditional grocery stores.”
Dollar General, which is planning 1,000 new stores this year, last week described plans to add three more DG Fresh cold storage facilities to support its phased shift to self-distribution of frozen and refrigerated products.
As of May, Dollar General was self-distributing to more than 9,000 of its 16,500 stores from six cold storage facilities. Once fully operational, the three new cold storage units will support 1,500 stores. The company launched its DG Fresh program in March 2019.
On its first-quarter conference call in May, Todd Vasos, CEO, said Dollar General “is seeing the substantial cost benefit we expected” from the shift to self-distribution of perishables.
The chain is also using its cold storage facilities to support its accelerated rollout of high capacity coolers as well as expanded offerings. In the first quarter, the number of its stores offering fresh produce expanded to approximately 750.
Finally, the facilities are expected to improve in-stocks. Mr. Vasos said the chain saw a “meaningful difference” in stock levels during COVID-19 “as our customers needed us the most.”
Mr. Vasos said the improved in-stock levels during the crisis “gives us even greater confidence that as we continue to move over upcoming quarters and years ahead that this is really going to pay a big dividend for us.”
- ALDI Ramps Up US Expansion with Goal of 2,500 Stores by End of 2022 – Aldi
- Dollar General Announces New Traditional Distribution Center and DG Fresh Cold Storage Facilities – Dollar General
- Dollar General Corporation Reports First Quarter 2020 Results – Dollar General
- Dollar General Corporation (DG) Q1 2020 Earnings Call Transcript –The Motley Fool
- Will Dollar General harvest big returns by taking perishables in-house? – RetailWire
- Why is Walmart so concerned about Aldi and Lidl? – RetailWire
- Will Aldi and Lidl replicate U.K. success in the U.S.? – RetailWire
- Is there any stopping Aldi as it makes SoCal move? – RetailWire
DISCUSSION QUESTIONS: How would you assess the unique threats from Aldi and Dollar General to traditional grocers and big box stores in the grocery category? Where do you see their respective strengths and weaknesses in grocery?