Walmart Inc. (NYSE: WMT) is the number one grocery retailer in America, with a 25% market share, even though it is not a grocery store per se. Costco has the number two spot. Kroger is trying to buy Albertsons to remain a key player in the industry, but the Federal Trade Commission is trying to block the $25 billion deal. In the meantime, Germany’s Aldi, which has 12,000 grocery stores worldwide, plans to increase its U.S. footprint aggressively.
Aldi announced it would add 800 locations in the United States by 2028. It has 2,300 today. It will spend $9 billion to do this. As he announced the plan, Jason Hart, chief executive, said, “Our customers fuel our growth, and they are asking for more Aldi stores in their neighborhoods nationwide.” His company recently bought smaller grocery chains Winn-Dixie and Harveys Supermarkets.
Walmart should be concerned about Aldi because it is a huge discount grocery store operator. It has 275,000 employees in its two divisions, which produced revenue of over €100 billion last year.
The grocery business in America is becoming crowded. As is usually the case, the top company is a major target. Walmart has a significant advantage. It has over 4,600 stores and is the largest retailer in America. It can also capture customers in its locations to buy other non-grocery items. (Here are 11 things to never buy at Walmart.)
Market share competition usually means costly promotions to bring customers into stores. As a low-priced operator, Aldi must understand that well. Walmart may not lose a huge number of customers, but it has grown over the decades through discounting. It faces an experienced discounter wanting to do better in the United States.
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