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Great piece in BusinessWeek about the Aldi Group, the German retailer that is having an enormous impact on markets where it has stores.

“Aldi is Europe's stealth Wal-Mart,” BusinessWeek reports. “Like the Arkansas-based giant, Aldi boasts awesome margins, huge market clout, and seemingly unstoppable growth -- including an estimated sales increase of 8% a year since 1998. It relentlessly focuses on efficiency, matching or even beating Wal-Mart Stores Inc. in its ability to strip out costs. Yet privately owned Aldi is also very old-school German, financing expansion with cash to avoid debt, shunning publicity, and moving quietly into new markets before the competition catches on. That has allowed the onetime local grocer in Essen to become one of the world's biggest retailers, with $37 billion in sales, a fraction of Wal-Mart's $245 billion but enough to give Aldi a 3.5% market share in Europe, vs. 6.8% for market leader Carrefour…”

That’s Europe. But Aldi also is growing in power in the US, according to BusinessWeek:

“Aldi now shows signs of stepping up the pace of its expansion on Wal-Mart's turf. Aldi opened its first U.S. store in Iowa in 1976 and has sales of $4.8 billion in North America.” And, “Trader Joe's Co., a specialty grocer owned by a family trust that Aldi co-founder Theo Albrecht created for his sons, has become the hottest thing in U.S. retailing by extending the Aldi concept to upscale products like wine and cashew butter. Aldi aims to open 40 stores a year until 2010, bringing the U.S. total to 1,000. Aldi is even buying up sites from retailers trampled by Wal-Mart.”

No less an authority than Burt Flickinger III of the Strategic Resource Group tells Business Week: "It is an uncharacteristic weakness of Wal-Mart that it has not recognized how formidable a foe Aldi is."
KC's View:
Aldi has created a near-cult appeal among consumers who love it for its prices and its limited selection; Trader Joe’s seems to have created an actual cult (of which we’re a member).

If indeed Wal-Mart has underestimated Aldi, we suspect that isn’t the case anymore. It’ll be a rivalry that potentially will provide great theater.