German retailers make aggressive expansion into North American market

Aldi, a German grocer, has begun an aggressive expansion into the North American market. Currently, the retailer operates 1,600 U.S. stores, and plans to add another 400 by the end of 2018, as well as spend $1.6 billion to remodel 1,300 of them. Now, Aldi has announced further plans plans to invest USD $3.4 billion to expand its U.S. base to 2,500 stores by 2022.

 

What’s more, German rival Lidl plans to open the first of its 100 U.S. stores on June 15. The company has said it will price products up to 50 per cent lower than rivals, making market competition even more fierce.

 

Aldi’s latest store expansion will create 25,000 U.S. jobs and make it the third-largest grocery chain operator in the country behind Wal-Mart and Kroger Co. The furious pace of expansion by Aldi and Lidl is likely to further disrupt the U.S. grocery market, which has seen 18 bankruptcies since 2014.

 

However, retailers above the border should also take note: this move could spell disaster for the Canadian grocery sector, say experts from New-York based global management consultancy Oliver Wyman. As such, Canadian grocers—especially discount chains—must steel themselves for tough competition ahead. This could mean offering discounts, creating new sales campaigns, or even expansion.