Aldi plans massive U.S. investment ahead of Lidl launch

Aldi plans massive U.S. investment ahead of Lidl launch

Aldi plans massive U.S. investment ahead of Lidl launch

In a statement, Aldi said it plans to invest $3.4 billion to expand its footprint to 2,500 stores nationwide by the end of 2022.

With Aldi further entrenching itself in the US, grocers large and small will have a tougher time squeezing out profit margins, especially as food prices continue to deflate.

In a turbulent retail environment, ALDI is bucking the trend plaguing many retailers by accelerating its growth of new stores with a total capital investment of $5 billion in new and remodeled stores over the next five years.

It follows investment of $1.6 billion earlier this year to remodel and expand more than 1,300 U.S. stores by 2020.

If all goes to plan, Aldi will become the third-largest retail chain in the US, while also claiming to offer prices that are 21% more affordable than major rivals such as Wal-Mart Stores Inc (NYSE:WMT), the largest retail chain in the country.

By 2018, Lidl plans to open 100 stores across the U.S., stirring up competition with U.S. grocers by pricing products up to 50% lower than its competitors. It operates more than 1,600 stores today.

Aldi was founded more than a century ago when Anna Albrecht opened a small store in Essen, Germany.

They add the expansion move by the German private-label giants could add to the pressure on conventional retailers like Wal-Mart Stores Inc and Kroger Co to cut their prices.

Aldi said on Sunday that it will be investing $3.4 billion into the expansion, bringing its United States locations up 56.5% from 1,600 to 2,500 by 2022. Aldi's 2,500 stores would equal about 53pc of Wal-Mart's USA outlets.

ALDI has been disrupting the USA grocery industry by providing customers with a smarter way to shop. Analysts have estimated that it could roll out as many as 600 USA locations over the next five years.

Aldi added more to its produce department and increased its gluten-free and organic offerings the past few years trying to appeal to shoppers who are more mainstream.

"Aldi's discount model appears to be the way of the future", according to Zacks.

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