MarketWatch has a story about how German discounters Aldi and Lidl, as they devise expansion plans in the US, are "moving into wealthier areas as Americans of all stripes get more budget-conscious and their traditional low-to-middle-income niche gets crowded with competitors. Aldi is going even further in appealing to upscale tastes by stocking some fancier goods, such as organic foods."
While both retailers have in the past focused on cash-strapped communities for their growth, the story suggests that in order to achieve desired market share gains in the US, they'll need to have broader appeal. But this doesn't mean that, while offering new categories like refrigerated produce and organic ground beef, that either company will abandon their traditional savings-oriented approaches.
At Aldi, for example, customers still have to rent shopping carts for a quarter, can't call the stores because there are no phones (it reduces staff distractions), and find stores that "feature no-frills décor, skimpy in-store marketing and a limited assortment of foods, more than 90% of which are house-branded."
While both retailers have in the past focused on cash-strapped communities for their growth, the story suggests that in order to achieve desired market share gains in the US, they'll need to have broader appeal. But this doesn't mean that, while offering new categories like refrigerated produce and organic ground beef, that either company will abandon their traditional savings-oriented approaches.
At Aldi, for example, customers still have to rent shopping carts for a quarter, can't call the stores because there are no phones (it reduces staff distractions), and find stores that "feature no-frills décor, skimpy in-store marketing and a limited assortment of foods, more than 90% of which are house-branded."
- KC's View:
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I've felt for a long time that companies like Aldi and Lidl, as they expand in the US, are likely to have an impact even on stores that are more upscale and more focused on fresh food. That seems to be part of what they are counting on for growth ... and we have the UK experience to look at as an example of how they can hurt traditional retailers.
