Aldi takes on U.S. rivals with scores of new products

[August 09, 2018]  By Richa Naidu

BATAVIA, Ill. (Reuters) - German-owned discount supermarket Aldi Inc is rolling out scores of new products in the United States, it said on Thursday, in an aggressive push to expand in the country even as rivals are struggling in a drawn-out price war.

Aldi, the world's No. 5 retailer owned by Aldi Sud, embarked on a $5 billion plan last year to remodel and expand its U.S. chain to 2,500 by the end of 2022 from 1,600 in June 2017. Its small store model keeps prices down and has upended Britain's grocery market.

A fifth of all products in Aldi stores will be new by early 2019, the company said, adding that it had targeted popular categories including easy-to-prepare food and fresh, organic produce and meat. Aldi said it was halfway through remodeling some of its stores to include more refrigeration space.

Traditional grocers such as Walmart Inc <WMT.N> and Target Corp <TGT.N> have been slashing prices to win back shoppers lost to Amazon.com Inc <AMZN.O> and other e-retailers. Surging commodities and transportation costs are also forcing companies that supply retailers with packaged goods to raise prices.

Aldi, whose products are 90 percent private-label, is far less exposed to these rising costs.

"At a time when the rest of the industry is really struggling, Aldi is thriving and investing," Aldi Chief Executive Jason Hart said in an interview. Regular supermarkets offer too many products, while Aldi's four- to five-aisle stores help to keep down costs and prices, he added.

Seeking to drive e-commerce sales, Aldi began working with Instacart Inc last year to deliver groceries in Atlanta, Chicago, Dallas and Los Angeles.

Rival German discount grocery chain Lidl, which opened its first U.S. stores last summer, also aims to grow in the United States, pricing products at up to 50 percent cheaper than competitors.

Aldi is also expanding in Britain, where store openings by traditional market leaders Tesco Plc <TSCO.L>, Sainsbury's <SBRY.L>, Asda <WMT.N> and Morrisons <MRW.L> have slowed to a trickle. The company aims to have 1,000 UK stores by 2022, up from 762, a top Aldi executive told Reuters in March.

(Reporting by Richa Naidu; Editing by Richard Chang)

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