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The Wall Street Journal reports that german discounters Aldi and Lidl, having done a good job of having disrupted the UK supermarket business and nibbling away at market shares there, now seems to be doing the same thing in some US markets.

According to the story, "The privately owned foreign companies have increased sales with their simpler stores that offer fewer products at lower prices. In response, U.S. grocers are lowering prices on staples such as milk and eggs and adding more products the discounters aren’t known for, such as fresh foods. The battle comes as supermarkets already are fighting to keep customers from shopping more online."

John Ross, president and chief executive of IGA Inc., tells the Journal, “Our country has been invaded by the German retailers, and they have disrupted the ecosystem quite severely." He called it "the biggest shift for U.S. grocers since Walmart Inc. entered the food business in 1988. Today Walmart is the biggest U.S. food seller."

In addition, "Walmart executive Steve Bratspies said at a recent conference that the giant retailer is counting on its wider range of products and equally low prices to keep customers loyal." The responses by competition have "pressured Aldi and Lidl to move beyond their no-frills model to attract U.S. shoppers. They are adding more produce and baked goods and renovating store interiors with brighter lighting and new layouts. Aldi said remodeled stores offer 20% more retail space."

The story goes on: "Sales at 'limited assortment' stores, a category that includes Trader Joe’s in addition to Aldi and Lidl, are projected to grow 5.6% annually through 2023, according to Inmar Analytics Inc., while sales at traditional supermarkets are projected to increase 0.5% annually … Aldi, which opened its first U.S. store in Iowa in 1976, has doubled its store count over the past decade to about 1,900 across 36 states. Lidl, which entered the U.S. two years ago, aims to have more than 100 U.S. stores open by the end of next year."
KC's View:
In some ways, this was entirely predictable, since roiling markets is exactly what Aldi and Lidl do.

Because of the size of the US market, they can't have the kind of sweeping border-to-border impact here that they've had in the UK. But on a selective basis, in the markets they do serve, they can have a devastating impact … and it is likely to be become a bigger problem for so-called traditional retailers when a recession comes.

I would suggest that IGA's problem isn't that there has been an "invasion of German retailers." Its real problem may be that IGA stores not only don't play very good defense, but also aren't very good at offense. "Hometown Proud" may only get you so far in this marketplace.