The German grocery chain plans to expand its network to 2500 stores in the U.S. and remodel most of its existing stores. As Fred Katayama reports, that'll make it the U.S.' third largest operator.
Look for lower prices as a German retailer guns to become the third largest grocer in the U.S. Aldi says it'll invest $3.4 billion to expand its store network to 2,500 in five years. That would expand its store base to roughly half that of Wal-Mart and place it behind number two Kroger in size. Aldi's expansion could further intensify a price war. It aims to undercut its rivals by 21 percent in pricing. What's more, compatriot Lidl plans to open the first of its 100 stores in the U.S. on Thursday and price goods up to 50 percent lower than rivals. Not to be outdone, Wal-Mart is pushing its vendors to undercut rivals by 15 percent. Aldi plans to spend $1.6 billion to remodel 1,300 of its existing 1,600 U.S. stores. And it will add more in-house brands to lure customers. The Germans have firepower. Aldi's and Lidl's furious expansion upended big grocers in the U.K. But Telsey Advisory senior analyst Joseph Feldman said, "The U.S. market is a little different. There's a lot more low price competition than in most UK, European markets. U.S. groceries have been preparing for it. Wal-Mart is trying to clean up its stores. Kroger is operating as efficiently as possible." Wal-Mart shares rising at the market open; Kroger's fell.