Have Aldi and Lidl started a grocery price war in the U.S.?
The German hard discount grocery chain Aldi has been in the U.S. since 1976. Lidl, another German import, began opening its first American stores last June. The two chains, which operate relatively small stores, are having an oversized impact on the U.S. grocery market as their low prices put pressure on rivals from Albertsons to Walmart.
A recent article by Bloomberg asks whether the growth of Aldi and Lidl is leading to a full-blown price war in the U.S. grocery industry. The news service points to a recent Kantar Retail study in Charlotte, NC, which showed Walmart had displaced Dollar General in offering the lowest grocery prices in the market. The explanation was that Walmart and others were lowering prices to get ahead of an eventual entry by Lidl in the market.
“If it’s death by a thousand cuts, Aldi and Lidl are holding the blade,” Mike Paglia, a grocery analyst at Kantar, told Bloomberg. “It looks a lot like a price war, and you’re starting to see those ripple effects.”
As previously reported on RetailWire, Lidl has faced stumbling blocks in its American launch. The chain, which has opened 47 stores since June and initially planned to have at least 100 open in its first year, has pulled back on some planned openings as it faces challenges cracking local markets. A report by InMarket found that Lidl’s market share at stores in the Carolinas and Virginia slipped from three percent in June to two percent in August.
Aldi has been aggressively adding stores in the U.S., particularly in California, Florida and Texas, and plans to have over 2,000 stores operating in the country by the end of this year. The grocer, which currently holds a 1.5 percent national share of the U.S. grocery market, has seen its sales double over the past five years.
- The Germans Are Escalating America’s Grocery Price War – Bloomberg
- Will Lidl follow Aldi’s path in the U.S. – or Tesco’s? – RetailWire
- Why is Walmart so concerned about Aldi and Lidl? – RetailWire
DISCUSSION QUESTIONS: Do you see a full-scale grocery price war breaking out in the U.S.? What would price competition of this kind ultimately do to the grocery retail landscape? How would manufacturers be affected?