Wednesday 20 September 2017

Aldi gives Walmart a run for its money in latest $3.4bn US investment

German rival Lidl is set to open the first of its 100 US stores on June 15

The furious pace of expansion by the two firms is likely to further disrupt the US grocery market
The furious pace of expansion by the two firms is likely to further disrupt the US grocery market
Independent.ie Newsdesk

Independent.ie Newsdesk

Aldi is to invest $3.4bn to expand its US store base to 2,500 by 2022, raising the stakes for supermarker rivals caught in a price war.

The German grocery chain currently operates 1,600 stores in the US and said earlier this year that it would add another 400 by the end of 2018.

According to Reuters, the investment raises Aldi's capital expenditure to at least $5bn so far this year - and it comes at a time of intense competition and disruption in the industry.

German rival Lidl is set to open the first of its 100 US stores on June 15; last month, the budget store said it would price products up to 50pc lower than rivals.

The furious pace of expansion by the two firms is likely to further disrupt the US grocery market, which has seen 18 bankruptcies since 2014.

World's biggest retailer Wal-Mart is pushing vendors to undercut US rivals by 15pc; and is expected to spend about $6bn to regain its title as the low-price leader, analysts said.

In May, Aldi Chief Executive Jason Hart told Reuters the chain intended to have prices at least 21pc lower than rivals and would focus on adding in-house brands to win over price-sensitive customers.

"We're growing at a time when other retailers are struggling," Hart said in a statement.

The latest store expansion will create 25,000 US jobs and make Aldi the third-largest grocery chain operator in the country behind Wal-Mart and Kroge, the German chain said in a statement. Aldi's 2,500 stores would equal about 53pc of Wal-Mart's US outlets.

"As we continue to expand and grow, our purchasing power continues to increase and allows us to bring products at better prices for consumers," Scott Patton, Aldi's head of corporate buying, said in an interview.

Online Editors

Also in Business