FILE - A customer walks out of an Aldi supermarket on Aug. 17, 2023, in Pflugerville, Texas. (Photo by Brandon Bell/Getty Images)
As the proposed Kroger-Albertsons merger faces legal challenges, the no-frills German grocery store Aldi is eyeing a big expansion in the U.S.
Aldi announced this week that it plans to add 800 stores nationwide by the end of 2028, through a combination of new openings and store conversions. In a press release, the discount grocery chain said its five-year expansion plan will bring communities "the lowest possible prices during a time when consumers are more focused than ever on saving money."
Aldi is known for its cost-saving measures, like reducing labor costs with self-bagging and by keeping its carts in one place and requiring customers to temporarily loan a quarter to get one.
The announcement of more U.S. locations comes as inflation squeezes Americans’ household budgets on groceries and other goods. On average, prices remain about 19% above where they were before the pandemic, and consumers have been seeking new ways to cut down on spending.
This browser does not support the Video element.
Jerome Powell testifies about interest rates and inflation
Federal Reserve Chairman Jerome Powell told lawmakers on Wednesday that while inflation has cooled considerably in recent months, the central bank isn’t ready to cut rates yet. Powell said the central bank’s policy-setting committee "would like to see more data" that makes them more confident that inflation is moving down to their 2% target. "When we reach that confidence, the expectation is we will do so sometime this year, we can then begin dialing back," Powell said.
U.S. prices for food eaten at home typically rise 2.5% per year, but in 2022 they rose 11.4% and in 2023 they rose another 5%, according to government data.
In grocery stores, Americans have been shifting away from name brands to store-brand items, switching to discount stores or simply buying fewer items like snacks or gourmet foods.
Where Aldi plans to open new stores
Aldi said it’s looking to add almost 330 stores across the Northeast and Midwest regions by the end of 2028.
The company will also add more stores in Southern California and Phoenix – and enter new cities like Las Vegas.
On its website, Aldi shares many of its grand openings by state.
Some existing grocery stores to convert to Aldi
Aldi recently closed on its acquisition of Southeastern Grocers, the parent company of Harveys and Winn-Dixie grocery chains.
Aldi said it plans to convert "a significant number" of Winn-Dixie and Harveys Supermarket locations to its format over the next several years.
These chains are primarily located in states like Alabama, Florida, Georgia, Louisiana and Mississippi.
"Starting mid-summer, ALDI will begin a phased approach to the store conversion process," the company said in a press release. "ALDI anticipates that approximately 50 stores will begin the conversion process during the latter half of 2024, with the majority of these stores reopening as ALDI in 2025."
Who owns Aldi stores, and what's the connection to Trader Joe's?
Aldi is based in Germany with a U.S. headquarters in Batavia, Illinois, just west of Chicago.
But the brand name Aldi is really that of two companies. The chain was founded by brothers Karl and Theo Albrecht in 1946, and the business later split into two separate groups: Aldi Nord and Aldi Süd.
In addition to thousands of stores across Germany, Aldi Nord operates in Belgium, The Netherlands, France, Luxembourg, Poland, Portugal and Spain. Aldi Nord also owns Trader Joe's grocery chain in the U.S. – which operates separately from the group.
Meanwhile, Aldi Süd operates in the U.S. and was the group that purchased the 400 Winn-Dixie and Harveys supermarkets in the Southeast. It also operates in Australia, Austria, China, Hungary, Ireland, Italy, Slovenia, Switzerland, and the United Kingdom.
This story was reported from Cincinnati.