The Growth of Aldi: "The biggest shift for U.S. grocers since Walmart"

Aldi is a German discount grocery store, much like Safeway or Walmart. But Aldi is quickly gaining market share in the United States while growth at traditional supermarkets are stagnant or experiencing low growth rates. While many of us may not be familiar with Aldi as there are no stores near us, Aldi has about 1900 stores across the United States with another 100 in planning or under construction.

What makes Aldi so successful? Aldi is categorized as a "limited assortment" store, stores that offer fewer products at lower prices, a category which includes Trader Joes. Offering fewer products allows for faster turnover, and smaller stores decrease rent and energy costs. Aldi has been able to cut costs by delegating work to the shoppers as was the grocery model of the past. For example, customers are expected to bag their own groceries, cutting the need for workers. Because Aldi has been so successful at cutting costs, they are able to keep their prices very low, thereby attracting more customers while also achieving higher profit margins. By marketing the quality of their products, Aldi has also appealed to the middle and upper class as well, allowing it to attract a wide range of people from different socioeconomic backgrounds.

In response to Aldi's invasion, other supermarkets have cut prices on staple foods like bread. Aldi has learned to cater to American's preferences, increasing the supply of baked goods and produce. If Aldi is able to gain the hearts of Americans through its lower prices, then Aldi will be a big disruption in the traditional supermarket market.

Sources: https://www.wsj.com/articles/aldi-lidl-cut-into-u-s-grocers-turf-11571140800
https://www.wsj.com/articles/how-grocery-giant-aldi-plans-to-conquer-america-limit-choice-1506004169