Aldi and Lidl, the two Europe-born “hard discounters” taking over the U.S. market, are expected to grab $53 billion to $67 billion in U.S. food store sales by 2021, Brick Meets Click Chief Architect Bill Bishop and Customers & Guests founder and former Jewel Foods CEO Bill Bolton said last week at Western Michigan University's Food Marketing Conference, according to an article in Progressive Grocer.
Analysts expect the low prices, quality goods and unconventional "treasure hunt" offerings will win over more U.S. shoppers as both stores take over the market. By 2018, Aldi will have more than 2,500 stores in the country. Lidl, which is slated to open its first U.S stores later this year, will have up to 1,000 stores by 2021.
Both retailers are expected to bring about a wholesale change in the way food retailing is done with a recognizable low-cost infrastructure. While Aldi and Lidl are challenging traditional grocery, the analysts predicted they will be pushing each other to innovate, as well. Lidl is considered the disruptor, since it's coming into a market where Aldi had been the major player.
Since the 1960s, supermarkets in the U.S. have tripled and quadrupled in size, reaching an average of more than 45,000 square feet. In an age when much of the population feels it's on the go all the time, the idea of being able to get into and out of a reasonable-sized supermarket quickly appeals to a lot of people. That's one of the business concepts these two companies bring to America. Aldi's stores are an average of 15,000 square feet — far less even when the new design expansion of about 3,000 square feet is considered.
These two stores have a lot to offer besides their relatively smaller floor plans. They have lots of private label products — most offering, as repeat shoppers will attest, quality comparable to national brands at a fraction of the price. They also do a good job of holding overhead costs down with stores smaller than conventional grocers have been building, in places more convenient for millennials who often don't have cars, with lower employee counts and improved energy efficiency.
Aldi announced a comprehensive redesign to step up its produce efforts. Lidl will put fruits, vegetables and other fresh food concepts front and center. The efforts have worked in Great Britain; UK-based mom blog Bunny on a Budget includes this rave review: “The first thing that hits you when you walk into the [new Lidl store] is the amazing smell of the bakery. Everything that I have tasted so far is delicious, from blueberry muffins, doughnuts and cinnamon rolls to warm tiger loafs."
Endorsements of that type are gold. Both Aldi and Lidl will be working hard to earn them as they try their best to disrupt the U.S. grocery-selling scene. Meanwhile, other retailers can try to fill in what Aldi and Lidl can't do, creating more customer service experiences and prepared food offerings, while still keeping prices low.