Inflation Is Assisting Europe’s Discount Stores Gain on Walmart

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Research from footfall-analysis company Placer.ai shows that budget grocers Aldi Einkauf SE and German rival Lidl, part of Germany’s Schwarz Group, are gaining traction with U.S. consumers too. This could accelerate further as inflation takes its toll on household spending. And that should worry the big U.S. food retailers, such as Walmart Inc., Target Corp. and Kroger Co.

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Aldi and Lidl are best known for their cheap prices and limited ranges. Consumers turned away from these so-called hard discounters during the pandemic because they could not find all the products they wanted. Instead, they opted for a weekly shop at a big-box store where they could find everything under one roof.
But with food prices rising the most in 40 years, shopping habits are changing.
Aldi has been in the U.S. for nearly 50 years, but it is now expanding rapidly. It has 2,100 stores across 38 states and is poised to open 150 more this year. It is on track to be the third-largest U.S grocer by store numbers by the end of 2022.
Lidl only arrived five years ago, and after a slow start, it is now gaining momentum. It has around 170 U.S. stores and is clearly chiming with American shoppers.
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A big strength of these discounters is their ability to adapt offers to their local markets. For example, they have introduced more fresh produce and fancy but still reasonably priced wines to appeal to the cash-strapped middle classes.

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