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6/18/17

Germany: Aldi fires $3.4 billion shot in U.S. supermarket wars

One of the several Aldi's in Fort Lauderdale
German grocery chain Aldi Inc [ALDIEI.UL] said on Sunday it would invest $3.4 billion to expand its U.S. store base to 2,500 by 2022, raising the stakes for rivals caught in a price war.

Aldi operates 1,600 U.S. stores and earlier this year said it would add another 400 by the end of 2018 and spend $1.6 billion to remodel 1,300 of them.

The investment, which raises Aldi's capital expenditure to at least $5 billion so far this year, comes at a time of intense competition and disruption in the industry.

German rival Lidl will open the first of its 100 U.S. stores on June 15. In May, Lidl said it would price products up to 50 percent lower than rivals.

The furious pace of expansion by Aldi and Lidl is likely to further disrupt the U.S. grocery market, which has seen 18 bankruptcies since 2014. The two chains are also upending established UK grocers like Tesco Plc (TSCO.L) and Wal-Mart's UK arm, ASDA.

In May, Aldi Chief Executive Jason Hart told Reuters the chain intended to have prices at least 21 percent lower than rivals and would focus on adding in-house brands to win over price-sensitive customers.

"We're growing at a time when other retailers are struggling," Hart said in a statement. Hart added that Aldi's prices were also up to 50 percent lower than traditional grocery chains, a move that appeared to follow rival Lidl's announcement on prices

Read more: Aldi fires $3.4 billion shot in U.S. supermarket wars | Reuters

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