Aldi Slips into Cities Where Walmart, Target Raise Local Ire

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April 5, 2011

Many retailers – including retail giants Walmart and Target – plan to open smaller-format stores in urban markets, but in some areas local residents, union and regulators are slowing things down.

Not so for small-format private-label German retailer Aldi, which has been opening stores in cities across America for several years unimpeded. In fact, it recently opened a location in Queens, N.Y. with no difficulty, while Walmart and others struggle there, according to a recent New York Times report. Aldi plans to open a second New York City store in the Bronx later this year.

After blanketing suburbia with stores for year, Walmart, Target and even large grocery chains s are targeting inner cities. Walmart recently announced it plans to build hundreds of smaller, urban stores in the near future, while Target said it plans to open small-format stores in Chicago and Seattle. Supevalu said it is opening five Save-a-Lot stores in Chicago.

Meanwhile, Aldi is already in most of the cities these retailers are targeting.

“They’re not only doing the small format more rapidly, but they’re getting into the urban areas more rapidly than either Walmart Express or the city Targets,” Craig Johnson, president of the consulting firm Customer Growth Partners, told the New York Times. “Even though the company’s headquartered in Germany, they’ve opened up a New York store quicker than Walmart has.”

Like Walmart, Aldi is non-union. But unlike Walmart, Aldi has experience little opposition during its U.S. expansion.

“There’s no reason to oppose an Aldi — it’s a small format, and they usually get space from an existing landowner or landlord, a small guy who’s plugged into the community, not a big guy like a Forest City Ratner,” Johnson said. “Walmart has sort of become a bad guy that there’s a concerted effort against. I’m not sure that Aldi has really gotten on anyone’s radar screen.”

Aldi opened its first store in the U.S. in 1976, opening about 25 stores per year. The chain has accelerated store expansion over the past few years, however, opening upwards of 250 locations. Aldi plans to open 80 stores this year and in 2012, Jason Hart, co-president of Aldi’s United States division, told the New York Times.

“We carry 1,500 of the most popular grocery items out there,” Hart said. “You won’t find some exotic spice or exotic produce items in our stores; you won’t find every flavor of every items. When you look at the large supermarkets that may have 20- to 30,000 items, or superstores, with over 100,000 items, it’s surprising to the customers how much of the shopping list we’re able to fit into our smaller store.”

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