Discounters in the US

PROSPECTS

Discounters maintains its winning streak in the US

Even as the US economy continues to rebound from the recession of 2008-2009, consumers across the nation have attempted to stretch their spending dollars further by shifting towards retail channels that emphasise value. This has been a boon for US discounters, which offer a more limited assortment of products than supermarkets but are able to sell the items they do stock at much reduced prices, largely thanks to very low overheads and robust private label strategies.

US discounter chains astutely expand their product assortments

Limited product assortments are integral to the success of discounters, as they help to keep operations streamlined and prices low. As the discounters channel matures in the US, however, some of the leading players in the space have begun to add to their product assortments in a bid to better compete head-to-head with supermarket banners.

Discounters takes further strides towards an omnichannel future

As limited assortment grocers that place an emphasis on value above all else, the leading discounter chains were, for a time, thought to be more insulated from the creeping threat of e-commerce than most other retailers. The last few years, however, have made it abundantly clear that even discounters need to embrace some kind of online strategy if they wish to thrive into the 21st century.

COMPETITIVE LANDSCAPE

Aldi overshadows all competitors in the US discounters channel

In the minds of many US consumers, the discounters channel is synonymous with the Aldi brand – and rightfully so, since Aldi Inc dominates the channel in the country to a remarkable degree. Even as Schwarz Beteiligungs GmbH, Aldi’s global rival, attempted to secure a foothold in the US by opening its first Lidl stores in the country in 2017, Aldi’s value share of the channel has continued to rise.

Lidl takes another stab at US expansion

Lidl, owned by Germany company Schwarz Beteiligungs GmbH, is the leading discounter banner in Western Europe. In 2017, it opened its first stores in the US to much fanfare, promising to compete head-to-head not only with Aldi Group, but also US grocery heavyweights like Walmart Inc and Kroger Co.

Grocery Outlet charts its own path to success

Although Aldi Inc dominates the US discounters channel to a remarkable degree, in 2019, the German-owned company had to share the spotlight with Grocery Outlet Inc, a US-based competitor. Over the course of the year, Grocery Outlet – which operates a network of discounter stores on the US West Coast and the state of Pennsylvania – filed a successful IPO, won plaudits in the trade press, and posted higher year-on-year growth in retail sales and outlet count than Aldi.

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