Here's Why You Should Be Excited to See an Aldi or Lidl Pop Up in Your Neighborhood
It actually has nothing to do with shopping in their stores itself, but with prices – and how other retailers in your area will respond.
The American grocery market has been changing rapidly over the last few years – technology is playing a pivotal role in the rise of delivery services, stores are placing more stock in ready-to-eat options, and Amazon recently bought Whole Foods.
Another way grocery stores are evolving is the new presence of the popular German grocers springing up across the nation, Aldi and Lidl. Many have gone bananas for the chains' low prices, private label brands that rival name-brand items, and their eyebrow-raising approach to customer offerings, like Lidl’s line of affordably chic clothing by Heidi Klum.
But there’s another reason you should be happy to see these stores pop up in your neighborhood – and it has nothing to do with what’s happening inside their doors.
A new, in-depth look at Aldi’s presence in the Southern California area by the Orange County Register shows that the grocer’s first year of business in the region has had a direct impact on all shoppers – prices on groceries have dropped an impressive 3 percent since Aldi opened up shop in March 2016.
While it helps that the food industry is seeing some of the lowest prices since the early 2000's, the Orange County Register reports that other retailers in the Southern California region have scrambled to match Aldi’s lower prices on staples such as eggs, milk, celery, ketchup, and bananas.
In an industry where change seems to be the constant, Aldi’s approach to smaller retail spaces with fewer choices and lower prices is forcing retailers to respond. National grocers like Publix and Kroger are expected to lose a whopping 3.5 percent of the grocery industry’s business by 2021 with current disruptions, the Register reports. But even more of a challenge faces big-box retailers like Walmart and Target, who are expected to lose a staggering 6 percent of grocery business in the same time period.
Meaning Aldi, who already maintains more than 1,300 storefronts in the United States, and Lidl, who is slowly but surely creeping into business with 100 stores opening by early 2018, are poised to set national price agendas as they expand.
Despite the relatively low amount of stores that these two grocers have in comparison to legacy supermarkets, the Register’s study of Aldi shows that the Southern California locations pulled in upwards of $22 million per store each year – a stark contrast to the $14 million at Albertsons and $18 million at Ralphs in the same area.
The bottom line? Even if you don't shop at Aldi or Lidl, you can still expect to see other retailers rushing to meet the lower prices.