Aldi plans to open 100 new stores in the US this year

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Aldi, which already has more than 2,000 stores in 37 states, said the new stores will be located in Arizona, California, Florida and the Northeast region. The private grocer says it is on track to become the third largest supermarket chain behind Kroger (KR) and Walmart (WMT) in terms of store numbers, with 2,500 stores in the US by the end of 2022.
The expansion of Aldi is because the pandemic of the coronavirus has given supermarket chains a boost. With many shuttered restaurants and consumers stocking up on food and groceries to eat at home, grocery store sales are up 7.9% in December from the same month in 2019, according to the most recent data from the U.S. Department of Commerce.

Aldi has a low-cost business model and boasts that prices are up to 50% cheaper than traditional supermarkets. At approximately 12,000 square feet, the stores are much smaller than a typical 40,000 square foot US supermarket. More than 90% of the brands that Aldi sells are own private labels.

There are other quirks in the store too. Shoppers need 15 minutes to rent a shopping cart. At checkout, cashiers rush shoppers away to pack their own groceries at a different location outside the checkout.

Aldi’s closest competitor Lidl, another German grocer with a similar business model, is rushing to grow in the United States as well. Lidl entered the country in 2017 and has more than 100 stores. In August, Lidl said it would open 50 new stores by the end of this year.

Aldi opened its first US store in 1976, but has invested more than $ 5 billion in recent years to renovate existing stores and open hundreds of new ones.

But the company could face a tougher environment in 2021 than last year. According to UBS analyst Michael Lasser, food sales will drop by 5% in 2021 due to the advent of the coronavirus vaccine and consumers eating more meals out of the house again.

Aldi also said on Wednesday that it will expand its offering of street-side pickups to 500 additional stores this year. Aldi currently offers customer pick-up service from approximately 700 stores, and the chain has a separate partnership with Instacart to deliver groceries from most locations.

According to Lasser, online sales, including curbside pickups, accounted for 21% of US supermarket sales in 2020, compared to 4% in 2019.

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