Aldi Versus Lidl: Where the German Grocers Stand in the U.S.
Two German-founded grocers, Aldi and Lidl, have attracted shoppers in the United States with ample private label options at low prices. But how do the two chains differ?
Data science firm dunnhumby has released a new report detailing the trajectories of Aldi and Lidl and how they both should “scare” competing retailers.
According to dunnhumby, Aldi is the 13th largest grocery chain in the U.S., making up 2.1% of the grocery market, while Lidl ranks as the 45th largest U.S. grocery, making up 0.3% of the market. Focused in the East Coast, Lidl’s footprint is much smaller than Aldi’s, which recently announced plans to purchase two banners from Southeastern Grocers, potentially further growing its presence in the south.
Aldi continues to grow as well. Since the end of 2020, Aldi has grown more than any of the 40 largest grocery retailers in the U.S. (14% 3YoY). In addition to its smaller store presence, dunnhumby says that Lidl is disadvantaged due to arriving in the U.S. after Aldi.
“Not only did Lidl not avoid going head-to-head with Aldi, they tried to run straight at them, choosing to launch in Aldi’s East Coast footprint,” said dunnhumby. “This makes it harder for Lidl, the relative newcomer, to differentiate on its core competency of rock-bottom base prices and its unique assortment of private brands."
The two retailers are similar in many ways. They both have more than 80% of sales coming from private label products, and rank in the top five (Aldi first, Lidl fifth) of dunnhumby’s Grocery RPI study, which accounts for consistently low prices. Although Lidl has a wider range of products than Aldi, it captures only 16% of its shoppers’ grocery budgets, while its chief competitor captures 22%.
Despite Aldi’s dominance over Lidl, dunnhumby found that Lidl can still see success in the U.S. as long as it continues growing its store count. The west U.S. is one region where Aldi hasn’t reached yet, which could prove to be a valuable opportunity for Lidl to expand.
“Lidl will need to capitalize on its personalization engine, revisit its marketing communications with customers to establish a more clearly differentiation and establish a foothold in the West before Aldi does,” said dunnhumby.
The full report can be found here.