German Supermarket Aldi to Enter U.S. through 900 Locations

Aldi store

Aldi has been a core brand in the European battle for retail supremacy. However, the company raised the stakes by planning a strong takeover in the United States. The presence of such a German supermarket that takes pride in its low prices is going to add to the pressure this industry is already experiencing within this country. Major American firms are already engaged in a battle for most competitive price tags.

The German Supermarket Will Need Five Years to Open 900 U.S. Stores

Aldi is going to enter U.S. with its own weapons that consist of private-label products. This chain of supermarkets is wildly known for its stern control over prices. On Monday, the company announced that it is going to invest $3.4 billion in the U.S. territory to herald around 900 stores. However, this complex operation will need a time frame of five years to reach its full shape.

This move coincides with another German takeover announced earlier this year. Lidl is a European retail rival to Aldi that is going to open its first U.S. stores right this week. Similarly to its competition, Lidl is looking to operate as many as 100 locations by the summer of 2018.

Analysts Expect Major Changes in the Retail Industry by 2020

This wave of German private-label supermarkets that takes U.S. by the storm can end up being a new challenge for American retailers such as Kroger Co. and Wal-Mart Stores Inc. Eventually, they might feel the pressure to lower their prices even more than at present. The European presence surprises the U.S. market at a time of great deflation. The prices for food products are at their 17 straight months low. This is the longest period of deflation in 60 years.

An analyst at Bain & Co, Ken Knudson, sees a great shift in the retail industry in the following three years. Traditional grocers will have to adapt to a disruptive period through different strategies. By 2020, the deep discount branch of the grocery industry will increase by 10% dominating traditional stores.

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