USA: Aldi US is expanding and is further leaving Lidl US behind

Updated: Feb 19

Discount Retail Chain Aldi USA (privately owned by Aldi Süd) opens 100 new stores and expands its cooperation with the Instacart delivery service. German discounters are popular with the US customers.

Aldi Süd continues its successful expansion in the USA. Strengthened by the good business during the COVID pandemic, the German discounter plans to open a total of 100 new stores this year, mainly in Arizona, California, Florida and the northeastern United States. In 2022, Aldi wants to rise to number three behind Kroger and Walmart, measured by the number of supermarkets.

With this, Aldi also leaves its German discount archrival competitor Lidl in the USA behind. Lidl entered the US market in 2017 with great ambitions, but had slowed its growth in the meantime and has only been pushing the pace again for a year. So far, Lidl has mainly concentrated on the east coast, while Aldi is already present in three quarters of the states.

Lidl wants to increase the number of its supermarkets by 50 to 150 by the end of 2021, but Aldi already has more than 2000. Aldi has known the US market for decades, as it has been there since 1976. By the end of 2022, the number of supermarkets is expected to rise to 2,500 in 37 states. In addition, Aldi has opened another distribution center and regional headquarters in Loxley, Alabama. This should support the expansion of the network in Alabama and Florida. From there, delivery to Louisiana is also planned for the first time.

The southern states of the USA in particular have recently registered strong population increases, which have accelerated with the pandemic. Many people who can work from home have moved to warmer areas, where the cost of living is lower than in cities like New York or San Francisco.

"We are incredibly proud to continue to grow in all aspects of our business, from opening new stores to strengthening our e-commerce offerings," said Aldi US CEO Jason Hart.

In fact, Aldi also wants to further expand the “curbside pickup” in the USA, which is popular because of Corona, where customers can order online and then pick up their shopping bags on the sidewalk without having to enter the store. More than half of the supermarkets should offer this service by the end of the year.

German discounters are well received by US customers

Aldi announced that the cooperation with the online shopping service Instacart is to be expanded to almost all stores. On the Aldi website, customers can instruct Instacart to do their shopping in the supermarkets. Instacart buyers bring the products to their homes. However, this often involves significant fees that go to Instacart and the buyers themselves.

There is currently no online service in which the products are delivered directly from the warehouse. Given the low margins in grocery retailing, this business is often not worth it. This is also shown by the difficulties that even Amazon has with the supermarket chain Wholefoods.

With the success of Aldi and Lidl in the USA, the triumphant advance of the discounter concept with its own, inexpensive house brands continues. For a long time, most US consumers preferred to reach for well-known brands such as Kraft or Pampers. But in recent years, belief in the big brands has weakened. Here, too, the awareness is slowly gaining ground that house brands can also offer quality.

Both Aldi and Lidl, like the competition, have recently benefited from the pandemic because people cook more at home. According to the US Department of Commerce, supermarket sales increased by almost eight percent last year. With their low prices, the discounters also appeal to many people who have lost their jobs because of the Covid pandemic and who have to pay more attention to their money.

Not only Aldi Süd and Lidl are on the move in North America: Aldi Nord has also been present on the US market since it took over the upscale discounter Trader Joe’s in 1979. Trader Joe’s has a loyal fan base and operates 530 supermarkets across the country. Trader Joe’s opened twelve new stores since June. More are planned for this year.

The German discounters are quite popular with customers. In a ranking by the data service Dunnhumby, Aldi ranks fifth and Trader Joe’s even ranks third. For comparison: the retail giant Walmart has to be content with 14th place.

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