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Looks to me like the ultimate war between grocery stores in the US will be fought out between Amazon/WFM (premium, delivery) and ALDI/Lidl (discount, no-frills)

by rmoriz 9y ago

Looks to me like the ultimate war between grocery stores in the US will be fought out between Amazon/WFM (premium, delivery) and ALDI/Lidl (discount, no-frills). As a German I'm amazed by the "food haul" videos on YouTube and the positive feedback for ALDI US (belongs to ALDI Süd), Trader Joe's (ALDI Nord) and Lidl (part of Schwarz Gruppe, they just started in the US yesterday).

dx034 9y ago
Trader Joe's could also play a role. Basically also Aldi, just the other part (Aldi North whereas Aldi stores in the US are run by Aldi South). They have the money and motivation to really fight back and know how to achieve the same cost level as Aldi/Lidl.
- rmoriz 9y ago
  ALDI Nord and Süd have some family issues and probably won't combine their US ventures. I see the Schwarz Gruppe (Lidl, Kaufland) as the biggest contender in the US. Kroger is probably gonna have a very bad time.
  - dx034 9y ago
    I didn't mean that they'd combine volumes, but both could fight for share. So you have 3 contenders, 2x Aldi and Lidl. Lidl probably has most money to spend but the US market is huge, they can all grow at their limits without threatening each other too much.
- deleted 9y ago
  [deleted]
pjc50 9y ago
Aldi/Lidl have really taken over in the UK in the last 10 years. I'm not really sure how they manage it - more, smaller stores?
- dx034 9y ago
  Small stores, mostly own labels and fewer employees. They buy only packages that don't need unpacking, saving a lot of time getting products on the shelf. Employees work all positions in the store so that shelves are filled when it's less busy and everyone is at the checkout when needed. That way no employee is idle, saving salaries. In the UK they also profit from their European footprint. If you go somewhere else in Europe, you'll find that most products (nearly everything except for some food items) are the same as in the UK. They can buy in much bigger amounts than even Sainsbury's or Tesco as they operate in most European countries.
  - lorenzhs 9y ago
    They also have barcodes on just about every side of the packaging. The cashiers don't have to figure out which side is the one with the barcode, they can just slide it across the scanner in whichever orientation it's on the belt. This makes checkout super efficient.
    - thinkingemote 9y ago
      They also have very speedy checkouts, where the bagging is done by the customer at another table. This means one employee and checkout lane can do the work of three. Also, I've heard they pay their staff the most out of UK grocery stores. UK: I wonder about Waitrose and how WF was like it. Waitrose is owned and run as a cooperative, which I imagine is both unique and less easy for Amazon to buy.
    - ferentchak 9y ago
      This is only possible because they make their own products too. If you are Coke and need to compete with Pepsi you need to use the surface of your product to help with branding. If you are the only game in town you can have a white can covered in bar codes that says beer on the side.
- G2kyd7 9y ago
  Due to the intense competition in Germany, companies such as ALDI and Lidl are far more efficient than grocery stores in other countries, particularly the UK and US. Walmart tried to enter the German market years ago and was sent packing shortly after. The reason why the German stores are expanding is because there is very little profit to be made in Germany, whereas in other countries margins are much higher in supermarkets.
pythonaut_16 9y ago
Don't count out Kroger, the largest supermarket chain in the US. According to Wikipedia in 2015 it trailed only Walmart and Costo in worldwide revenue, and had 20% more revenue than Amazon. https://en.wikipedia.org/wiki/Retail#Global_top_ten_retailers https://en.wikipedia.org/wiki/Retail#Global_top_ten_retailer...
- batbomb 9y ago
  Yep. I grew up in a grocery store, and the chain eventually merged with Fred Meyer and then was bought by Kroger. Kroger allows every subsidiary to operate relatively independently. I wish we had more Kroger stores in the Bay Area actually, they are much better than Safeway.
- rmoriz 9y ago
  Kroger has some weak points: Only US, expensive store concept, many products. ALDI and Lidl are famous for their highly efficient lean store concept. Amazon will capture the premium/delivery segment. ALDI and Lidl will capture the discount segment. Kroger is right in between, a very, very tough position to hold.
  - rubidium 9y ago
    Except for the majority of middle class people like somewhere in between. They can't afford premium, but want a little more assistance than ALDI. Basically, there's three market segments, not two.
    - lotsofpulp 9y ago
      Going forward, I would bet on the middle market shrinking.
      - erikpukinskis 9y ago
        I wouldn't underestimate the number of people whose buying strategy is "cheap, but not the bottom".
sparkpeasy 9y ago
The major player currently is Walmart for most Americans. It's investing into online at a rapid pace, they recently added free online pickup for groceries and purchased Jet and Bonobos, so I think the real war will be between Walmart and Amazon/WF. Value basics and speciality stores like Aldi and Trader Joes (which have very spotty coverage currently in the US) and regional full-inventory stores (Piggly Wiggly, Harris Teeter, Bi-lo etc) will pick up the crumbs.
- rmoriz 9y ago
  I will bet against Walmart. They have a high cost structure for their existing stores which makes them vulnerable to hard discounters but they also invest a lot of money into their online ventures to fight Amazon. It's a battle on two fronts and will rip the company apart. In the past, Walmart failed hard in Europe but ALDI and Lidl even conquered UK and Australia. As you might now, Europe is far away from a single culture and yet both chains were able to win in every country due to adoption and experience. While they are no franchise concept, there strategy reminds me of McDonald's.
david-cako 9y ago
Walmart is the closest thing to "discount, no-frills" in the US, however it's 100% a facade. Their prices are realistically no better than chain grocery stores like Kroger, yet they do a very good job convincing poorer people that they are. Walmart is also really really gross. It doesn't matter where in the country you go, it feels like a hospital, and mysteriously the people always look like they're one stop away from one. They spent a lot of money and energy trying to roll out in store pickup, 2 day pickup, and online grocery shopping, which I have been reasonably pleased with, but I think this is slowly becoming a death sentence for them. The one thing they're missing is the brand. ALDI doesn't have as much dominance yet. Trader Joes has a bit more, and is all around a great store and reasonably priced compared to Whole Foods.
- matwood 9y ago
  "Walmart is the closest thing to "discount, no-frills" in the US, however it's 100% a facade. Their prices are realistically no better than chain grocery stores like Kroger, yet they do a very good job convincing poorer people that they are." I don't have a Kroger nearby, but WM is far cheaper than any other grocery chain in my area. I go to WM for all nonperishable items and then a more expensive store for fruits/veggies/meats.
kilroy123 9y ago
> ALDI/Lidl (discount, no-frills) I really see this as the future. Not the whole foods, upper scale, and more expensive store; model. By and large, the middle class is shrinking and with automation looming, it will only get worse.

by rmoriz 9y ago

dx034 9y ago

Trader Joe's could also play a role. Basically also Aldi, just the other part (Aldi North whereas Aldi stores in the US are run by Aldi South). They have the money and motivation to really fight back and know how to achieve the same cost level as Aldi/Lidl.

rmoriz 9y ago
ALDI Nord and Süd have some family issues and probably won't combine their US ventures. I see the Schwarz Gruppe (Lidl, Kaufland) as the biggest contender in the US. Kroger is probably gonna have a very bad time.
- dx034 9y ago
  I didn't mean that they'd combine volumes, but both could fight for share. So you have 3 contenders, 2x Aldi and Lidl. Lidl probably has most money to spend but the US market is huge, they can all grow at their limits without threatening each other too much.
deleted 9y ago
[deleted]

pjc50 9y ago

Aldi/Lidl have really taken over in the UK in the last 10 years. I'm not really sure how they manage it - more, smaller stores?

dx034 9y ago
Small stores, mostly own labels and fewer employees. They buy only packages that don't need unpacking, saving a lot of time getting products on the shelf. Employees work all positions in the store so that shelves are filled when it's less busy and everyone is at the checkout when needed. That way no employee is idle, saving salaries. In the UK they also profit from their European footprint. If you go somewhere else in Europe, you'll find that most products (nearly everything except for some food items) are the same as in the UK. They can buy in much bigger amounts than even Sainsbury's or Tesco as they operate in most European countries.
- lorenzhs 9y ago
  They also have barcodes on just about every side of the packaging. The cashiers don't have to figure out which side is the one with the barcode, they can just slide it across the scanner in whichever orientation it's on the belt. This makes checkout super efficient.
  - thinkingemote 9y ago
    They also have very speedy checkouts, where the bagging is done by the customer at another table. This means one employee and checkout lane can do the work of three. Also, I've heard they pay their staff the most out of UK grocery stores. UK: I wonder about Waitrose and how WF was like it. Waitrose is owned and run as a cooperative, which I imagine is both unique and less easy for Amazon to buy.
  - ferentchak 9y ago
    This is only possible because they make their own products too. If you are Coke and need to compete with Pepsi you need to use the surface of your product to help with branding. If you are the only game in town you can have a white can covered in bar codes that says beer on the side.
G2kyd7 9y ago
Due to the intense competition in Germany, companies such as ALDI and Lidl are far more efficient than grocery stores in other countries, particularly the UK and US. Walmart tried to enter the German market years ago and was sent packing shortly after. The reason why the German stores are expanding is because there is very little profit to be made in Germany, whereas in other countries margins are much higher in supermarkets.

pythonaut_16 9y ago

Don't count out Kroger, the largest supermarket chain in the US. According to Wikipedia in 2015 it trailed only Walmart and Costo in worldwide revenue, and had 20% more revenue than Amazon. https://en.wikipedia.org/wiki/Retail#Global_top_ten_retailers https://en.wikipedia.org/wiki/Retail#Global_top_ten_retailer...

batbomb 9y ago
Yep. I grew up in a grocery store, and the chain eventually merged with Fred Meyer and then was bought by Kroger. Kroger allows every subsidiary to operate relatively independently. I wish we had more Kroger stores in the Bay Area actually, they are much better than Safeway.
rmoriz 9y ago
Kroger has some weak points: Only US, expensive store concept, many products. ALDI and Lidl are famous for their highly efficient lean store concept. Amazon will capture the premium/delivery segment. ALDI and Lidl will capture the discount segment. Kroger is right in between, a very, very tough position to hold.
- rubidium 9y ago
  Except for the majority of middle class people like somewhere in between. They can't afford premium, but want a little more assistance than ALDI. Basically, there's three market segments, not two.
  - lotsofpulp 9y ago
    Going forward, I would bet on the middle market shrinking.
    - erikpukinskis 9y ago
      I wouldn't underestimate the number of people whose buying strategy is "cheap, but not the bottom".

sparkpeasy 9y ago

The major player currently is Walmart for most Americans. It's investing into online at a rapid pace, they recently added free online pickup for groceries and purchased Jet and Bonobos, so I think the real war will be between Walmart and Amazon/WF. Value basics and speciality stores like Aldi and Trader Joes (which have very spotty coverage currently in the US) and regional full-inventory stores (Piggly Wiggly, Harris Teeter, Bi-lo etc) will pick up the crumbs.

rmoriz 9y ago
I will bet against Walmart. They have a high cost structure for their existing stores which makes them vulnerable to hard discounters but they also invest a lot of money into their online ventures to fight Amazon. It's a battle on two fronts and will rip the company apart. In the past, Walmart failed hard in Europe but ALDI and Lidl even conquered UK and Australia. As you might now, Europe is far away from a single culture and yet both chains were able to win in every country due to adoption and experience. While they are no franchise concept, there strategy reminds me of McDonald's.

david-cako 9y ago

Walmart is the closest thing to "discount, no-frills" in the US, however it's 100% a facade. Their prices are realistically no better than chain grocery stores like Kroger, yet they do a very good job convincing poorer people that they are. Walmart is also really really gross. It doesn't matter where in the country you go, it feels like a hospital, and mysteriously the people always look like they're one stop away from one. They spent a lot of money and energy trying to roll out in store pickup, 2 day pickup, and online grocery shopping, which I have been reasonably pleased with, but I think this is slowly becoming a death sentence for them. The one thing they're missing is the brand. ALDI doesn't have as much dominance yet. Trader Joes has a bit more, and is all around a great store and reasonably priced compared to Whole Foods.

matwood 9y ago
"Walmart is the closest thing to "discount, no-frills" in the US, however it's 100% a facade. Their prices are realistically no better than chain grocery stores like Kroger, yet they do a very good job convincing poorer people that they are." I don't have a Kroger nearby, but WM is far cheaper than any other grocery chain in my area. I go to WM for all nonperishable items and then a more expensive store for fruits/veggies/meats.

kilroy123 9y ago

> ALDI/Lidl (discount, no-frills) I really see this as the future. Not the whole foods, upper scale, and more expensive store; model. By and large, the middle class is shrinking and with automation looming, it will only get worse.