If you‘re a savvy shopper always on the hunt for a great deal, chances are you‘re familiar with Aldi. This German-based discount supermarket chain has taken the world by storm, amassing over 10,000 stores across 20 countries. With its focus on selling high-quality private label products at rock-bottom prices, Aldi has earned a loyal following of bargain-minded consumers.
But in the fiercely competitive world of retail, Aldi is far from alone. Let‘s take a closer look at some of Aldi‘s biggest rivals around the globe and explore how this low-cost grocer stacks up.
Meet the Competitors
Lidl: Aldi‘s Archrival
When it comes to naming Aldi‘s #1 nemesis, the answer is clear: Lidl. Founded in 1930s Germany as a grocery wholesaler, Lidl opened its first discount stores in 1973 and has been going head-to-head with Aldi ever since.
Like Aldi, Lidl operates small, no-frills stores with a focus on private label products at ultra-low prices. With over 10,000 locations across Europe and the US, Lidl is Aldi‘s most direct competitor in terms of history, business model, and geographic footprint.
Recent market share data from Kantar Worldpanel shows Lidl gaining ground on Aldi in their home market of Germany, as well as other key European countries. In 2020, Lidl‘s sales rose 9.9% year-on-year, reaching €96.3 billion globally.
Walmart, Amazon, & Other Retail Giants
Outside of Lidl, some of Aldi‘s fiercest competition comes from the heavyweight champions of retail.
Take Walmart, for example. As the world‘s largest company by revenue, Walmart is a major threat to Aldi simply by virtue of its massive scale. With over 11,000 stores worldwide and global sales of $559 billion in 2020, Walmart‘s expansive product assortment and competitive prices put pressure on Aldi.
E-commerce juggernaut Amazon also looms large. Although Aldi has invested in online sales and delivery in some markets, its expertise is in brick-and-mortar retail. As more grocery shopping shifts online, Aldi will need to find ways to effectively compete with Amazon‘s dominance in this channel.
Membership-based warehouse clubs like Costco and Sam‘s Club also vie for the wallets of value-oriented shoppers. By selling bulk-sized products at discounted prices, these retailers can undercut Aldi on a per-unit cost basis.
A Regional Perspective
Beyond these global players, Aldi also faces stiff competition from regional grocers and discounters in its various markets.
United States
In the US, where Aldi has over 2,000 stores across 37 states, major competitors include:
- Kroger: The largest US supermarket chain, with 2,800 stores and $132 billion in 2020 sales
- Albertsons: 2,200 stores including Safeway, Jewel-Osco and other banners, with $69 billion in sales
- Dollar General: Fastest-growing US retailer with over 16,000 small-format discount stores
- Trader Joe‘s: Another German-owned chain known for unique private label products at great prices
Europe
In its European stronghold, Aldi goes up against a diverse set of competitors:
- Schwarz Group: Owner of the Lidl and Kaufland chains, with €113 billion in 2019 sales
- Tesco: UK‘s largest supermarket with over 3,400 stores and £53 billion in 2020 revenue
- Carrefour: French multinational with 12,225 stores globally and €80 billion in 2020 sales
- Asda: British supermarket chain recently acquired by the Issa brothers for £6.8 billion
Australia
In Australia, where Aldi has 500+ stores and an estimated 12.4% market share, key rivals include:
- Woolworths: Largest Aussie supermarket with over 1,000 locations and A$63 billion in 2020 sales
- Coles: Over 800 supermarkets and A$38 billion in revenue, on par with Woolworths
- IGA: Network of 1,400 independent grocers with sales of A$8.3 billion
Aldi‘s Competitive Edge
With such formidable competitors around the world, how does Aldi manage to thrive? The key lies in its steadfast commitment to a few core principles:
Ruthless Efficiency
No one does efficiency quite like Aldi. By offering a curated selection of only the most essential groceries—about 1,400 core products vs. 40,000 at a typical supermarket—Aldi keeps costs low. Stores are small and spartan, with minimal staff. This no-frills approach enables Aldi to sell its products at prices that are on average 20-50% lower than competitors.
Private Label Prowess
Over 90% of Aldi‘s products are private label. By cutting out the middleman and working closely with suppliers, Aldi maintains high quality standards while keeping prices low. Many of its exclusive brands are so popular that they‘ve developed a cult-like following, which builds loyalty.
Operational Discipline
From its modest store footprint to its pared-down assortment, every aspect of Aldi‘s business model is tailored for maximum efficiency. Tactics like requiring rent-a-cart deposits and having customers bag their own groceries reduce labor costs. Limited opening hours and a self-service ethos keep operational expenses down.
Challenges on the Horizon
Despite its many strengths, Aldi faces some challenges as it looks to maintain growth:
Lack of Variety & Choice
Aldi‘s streamlined approach to retailing has served it well, but it does limit choice for consumers. As competitors expand their assortments, especially in high-growth categories like natural and organic, Aldi may need to selectively broaden its offering to stay relevant with shoppers.
Value vs. Experience
In an age where many retailers are investing heavily in omnichannel capabilities, in-store experiences, and personalized marketing, Aldi‘s focus on pure value can seem one-dimensional. While low prices will always hold appeal, Aldi may need to balance this with other elements that customers increasingly expect.
Geographic Constraints
Although Aldi has expanded rapidly, there are still many regions where it lacks a presence. In the US, for instance, Aldi has minimal exposure on the West Coast and in the Northeast. This leaves whitespace for competitors to capture market share in these areas.
An Eye on the Future
As the grocery industry continues to evolve, the battle between Aldi and its competitors shows no signs of letting up. Fueled by the pandemic, we‘ve seen major shifts in how consumers shop for food—with trends like e-commerce and click-and-collect taking off.
To stay ahead, Aldi will need to strategically adapt its model for an omnichannel world while preserving the core tenets that make it unique. Recent partnerships with delivery services like Instacart and DoorDash are a step in the right direction. Ongoing investments in remodeling stores and expanding into new geographies will also be critical.
At the same time, Aldi‘s rivals aren‘t resting on their laurels. Walmart is doubling down on e-commerce, with grocery as a key focus area. Amazon‘s 2017 acquisition of Whole Foods showed just how serious it is about cracking the supermarket business. Hard discounters like Lidl and Dollar General continue to expand rapidly, putting more pressure on Aldi‘s low-price leadership.
One thing is for sure: Having revolutionized the industry once before, Aldi is well-equipped to tackle the challenges of 21st century retail. As an Aldi shopper myself, I‘ll be watching with great interest to see how this David vs. Goliath story unfolds. In the meantime, you can bet I‘ll still be lining up for those legendary Aldi Finds—competitors be darned!
