German twins Aldi, Lidl shaking up U.S. grocery business

Home delivery hasn't taken off, but the German discounters are eating supermarkets' lunch

To read all the rave reviews, you'd think Amazon was about to consume American supermarkets with its home-delivery and brick-and-mortar experiments.

But despite all the hype, home-delivery has not really taken hold in the grocery business. Instead, two German chains -- Aldi and Lidl -- are capturing market share the old-fashioned way, through heavy discounting and easy-to-navigate stores.

“We see hard discounters as more than just a new form of competition,” said Bill Bishop, chief architect of the consultancy Brick Meets Click, at a recent food marketing conference, according to Supermarket News. "In fact, we think they’re going to be a major disruptor and source of change influence on the grocery industry."

Bishop called the two "fraternal twins, but not identical ones" and said they have successfully upended shopping habits in Europe through steep discounts and despite having rather small stores.

Aldi currently has about 1,600 U.S. stores while Lidl is just entering the U.S. and plans to open about 100 stores a year. 

Aldi has interlocking ownership with Trader Joe's, and although it presents a totally different appearance -- very organized and tidy compared to the Trader's somewhat funky vibe -- it and Lidl both emphasize house brands, reducing the available selection but also making it easier to work quiclkly through a shopping list.

Bishop said Aldi, which is remodeling 1,500 stores for a brighter, more open look, is also moving away from its low-prices-everyday model, emphasizing weekend specials and "while they last" promotions.

Whatever the German cousins are doing, it's working. Sales have been growing steadily in Europe and the U.S. and the two are expected to have 3,500 U.S. stores by 2021.

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