Aldi's U.S. growth fueled by low prices and private brands

On the 1st, people lined up to shop and pay at a U.S. retailer Aldi store in Brooklyn

“A box contains six ice cream cones, and it’s on sale for less than 1 dollar, approximately 1,400 Korean won. Where in New York can you eat at this price?”

On the afternoon of the 1st, Zhenya Lereka, who was eating a strawberry-flavored ice cream she had purchased with her two daughters in front of the large retail store ALDI in Brooklyn, New York, made this comment while showing her receipt. The store interior was packed with people filling their shopping carts, and lines over 10 meters long stretched at each checkout counter. ALDI is a discount supermarket based in Germany. While large supermarkets like Costco, Walmart, and Trader Joe’s, known for their unique products, have been popular in the U.S., the number of people visiting ALDI has noticeably increased. The New York Times stated, “Consumers are flocking to ALDI.”

ALDI plans to open more than 200 new stores (net increase basis) in the U.S. this year. If this happens, by the end of the year, it will operate approximately 2,600 stores, becoming the third-largest supermarket chain in the U.S. by number of stores, following Walmart (over 5,200) and Kroger (over 2,700). Next summer, it will also open a store near Times Square, the most foot-traffic-heavy area in Manhattan.

According to Placers.ai, a platform that analyzes foot traffic for retail stores and restaurants, U.S. grocery store visitors increased by approximately 1.8% in the first half of this year compared to last year, while ALDI store visits surged by over 7%.

ALDI, which originated in Essen, Germany, in 1913, currently operates over 13,000 stores worldwide. ALDI’s advantage is that it offers high-quality products, such as organic agricultural goods, at low prices. Groceries are particularly affordable, with a baguette priced at 1.85 dollars, approximately 2,600 Korean won, and a 16-slice cheese package at 1.79 dollars, approximately 2,500 Korean won. Neil Saunders of GlobalData, a research firm, told The Wall Street Journal, “At ALDI, you can shop according to your budget and buy quite a lot for the money you spend.”

One reason ALDI can maintain low prices is its ‘private brand.’ Approximately 90% of ALDI’s products are private brand items, which are evaluated as being cheaper than other products. Dave Rinaldo, the chief operating officer of ALDI’s U.S. branch, recently stated, “Although food prices continue to rise, we have lowered the prices of 400 out of the 2,000 items sold in our stores.”

Another advantage is that using private brands allows ALDI to quickly release products that align with consumer trends. Recently, ALDI announced plans to add over 80 new protein products to its lineup in line with the protein trend. ALDI also displays products directly from boxes on shelves to reduce the time employees spend organizing items, a move aimed at avoiding unnecessary costs.