German Grocer Aldi Ups US Ante, Plans to Raise Store Total to 2,500

Retail

Published: June 12, 2017 2:00 pm

Last Updated: January 12, 2020 11:07 am

German grocery store chain Aldi is placing a huge bet on future growth by announcing that it plans to expand by 900 stores to 2,500 by the end of 2022, an announcement that got investors’ attention Monday.

Aldi, which has its U.S. headquarters in Batavia, Illinois, said it intends to spend $3.4 billion on the roll-out, which the company anticipates will add 25,000 jobs and serve 100 million customers.

The expansion would make Aldi the third-largest grocery store in the United States, according to Supermarket News. Aldi currently operates 1,600 stores in 35 states. Its stores are typically smaller than those of other supermarket chains.

The announcement sent shares of publicly traded companies with supermarket business lower in afternoon trading. Kroger Co. (NYSE: KR) sank 67 cents to $30.11; shares of Wal-Mart Stores Inc. (NYSE: WMT), the world’s biggest retailer, declined 41 cents to $79.01; and Costco Wholesale Corp. (NASDAQ: COST) pared $1.23 to $179.15 a share.

Aldi’s latest announcement builds on its earlier initiative in which the company said it would invest $1.6 billion in renovations for 1,300 stores.

Aldi is betting that it can win in the discount grocery space that has been the realm of Wal-Mart. The company, which located its first stores in lower-income areas of the United States when it first came to the United States in the 1990s, is making a push to include more fresh foods and gluten-free options.

“We’re growing at a time when other retailers are struggling,” said Chief Executive Officer Jason Hart in a statement. “We are giving our customers what they want, which is more organic produce, antibiotic-free meats and fresh healthier options across the store.”

Aldi’s German rival, Lidl, said in May that it plans to open the first of its 100 U.S. stores on June 15, and it is ratcheting up the discount competition by saying it would price products up to 50% lower than rivals.

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