There is a fierce price war going on in the United States retail market between the players. However, the German-owned discount supermarket Aldi Inc is taking on the market rivals in a significant push by the company to gain market share in the US market by roiling out dozens of new products, the company announced recently.
Las6t year, the German retailer had initiated an ambitious expansion plan in the US with an announced investment of $5 billion. The firm owned by Aldi Sud is the fifth largest retailer in the world and now wants to expand the number of stores it has in the US market from 1,600 in June 2017 to about 2,500 by the end of 2022. This German retailer has already shaken up the British retailing market by its strategy of smaller stores that helps it to keep its operational costs and therefore cost of products down.
The company said that by early 2019, about one fifth of all the products that it offers for the US market would be new. It also added that easy-to-prepare food and fresh, organic produce and meat are among the popular product categories that the company is targeting to bring a change in. The company has embarked on the project of increasing refrigerating space in its stores and Aldi said that it had managed to complete half of its target in this respect.
Intense rivalry and lost market share to online retailer Amazon.com has forced traditional retailers such as Walmart Inc and Target Corp to significantly slash their prices on offers to win back customers. Supplier companies to the retailers and grocers are also being forced to increase their prices because of increasing commodities and transportation expenses.
There is far less exposure to these costs for Aldi because nearly 90 per cent of the products that the company offers are private-label ones.
“At a time when the rest of the industry is really struggling, Aldi is thriving and investing,” Aldi Chief Executive Jason Hart said in an interview. He added that Aldi manages to keep costs down because it costs are kept down by its four- to five-aisle stores unlike traditional supermarkets and retailer who offer a very wide range of products.
Last year, Aldi started struck up a partnership with Instacart Inc for delivering groceries in Atlanta, Chicago, Dallas and Los Angeles as part of the company’s strategy to give more focus to e-commerce sales.
Last summer, Aldi’s German rival discount grocery chain Lidl also entered the US market and the retailer aims to make a fast growth in the market as the company has already priced its products at up to 50 per cent less than of its competitors.
Aldi is also an expansion spree in the UK where the major retailers and market leaders including Tesco Plc, Sainsbury’s, Asda and Morrisons have hardly opened a new store. According to reports quoting Aldi executives in the UK, the company has set a target of establishing a total of 1,000 stores in the UK by 2022 compared to the 762 that is currently now has.
(Adapted from Reuters.com)