German Grocer Aldi To Heat Up U.S. Competition

German Discount Grocer Aldi Sets U.S. Expansion Plan

Aldi says it will open nearly 900 stores, invest $5 billion over five years

Aldi says it will open 900 stores and invest $5 billion over five years. Photo by Anthony Devlin/Zuma Press

By Heather Haddon
June 11, 2017 9:00 p.m. ET

Competition in the U.S. grocery sector is about to get more fierce.

Discount grocery chain Aldi is expected to unveil on Monday plans to invest $5 billion to open nearly 900 stores and remodel hundreds more in the U.S.

The expansion, over the next five years, puts the German grocer on track to becoming the third-largest food retailer in the U.S. by store count, behind the larger Wal-Mart Stores Inc. and Kroger Co., and a growing threat to traditional food retailers.

Aldi said it is expected to have a total of 2,500 locations across the U.S. by 2022. Its plan comes as another German discounter, Lidl, is set to open its first 10 stores in the U.S. on Thursday as part of a multiyear expansion.

Executives at Wal-Mart and Kroger have been preparing for the growth of the discounters for years. Wal-Mart has been sprucing up its stores and slashing prices on some products in select markets, while Kroger continues to drive down costs to compete.

But the discounters could have a big impact on the U.S. grocery market as they did in Europe. Their market share there has steadily grown while traditional supermarkets have seen theirs fall.

Deep discount chains in the U.S. are expected to grow by up to 10% a year through 2020, five times the rate of traditional grocers, according to a recent report by consulting firm Bain & Co.

“It should absolutely be more than scary to traditional grocers and retailers,” said Mikey Vu, a partner in Bain’s retail practice.

Many shoppers in the U.S. are unfamiliar with Aldi. The chain has been in the U.S. since