As an avid Aldi shopper and retail industry analyst, I‘ve been closely following the German grocer‘s U.S. expansion for years. With over 2,000 stores across 37 states, Aldi has quickly become a major player in the American grocery landscape, disrupting the industry with its no-frills approach, emphasis on private label brands, and rock-bottom prices.
But one state that has been conspicuously absent from Aldi‘s otherwise aggressive growth trajectory is Utah. Despite being home to over 3 million residents, a booming economy, and a rapidly growing capital city in Salt Lake City, the Beehive State remains an Aldi-free zone.
So what‘s the holdup? Will Utahns ever get to experience the "Aldi effect" of saving big on their weekly shopping bills? As someone who has studied Aldi‘s strategy extensively and seen the impact it has had in other markets, I decided to investigate.
Aldi‘s Winning Formula
First, let‘s recap what makes Aldi so unique and successful. Founded in Germany in 1946 by brothers Karl and Theo Albrecht, Aldi operates on a strict low-cost business model that allows it to offer prices up to 50% cheaper than traditional supermarkets. Some key elements of the Aldi approach include:
- Smaller store footprint (averaging 12,000 sq ft vs. 40,000+ for competitors)
- Limited selection of items (about 1,400 core SKUs vs. 40,000+ at other chains)
- Heavy focus on private label brands vs. name brands (90%+ of Aldi‘s mix)
- Minimal staffing and store features (25-30 employees per store, no pharmacies or banks)
- Cart rental system and DIY bagging to minimize labor
- High volume purchasing and no-frills displays to keep costs down
- Strategically curated "ALDI Finds" of limited-time specialty items to drive traffic and buzz
This lean, efficiency-driven model has allowed Aldi to profitably sell its products at prices that are very difficult for other retailers to match. As a result, Aldi has developed a fiercely loyal following of budget-conscious shoppers and deal seekers, putting pressure on other chains to keep costs down.
Aldi‘s U.S. store count has ballooned from just 600 locations in the early 2000s to over 2,000 today, with plans for 2,500 stores by the end of 2022. Industry watchers estimate that Aldi now captures about 2-3% grocery market share in the U.S., and its influence on pricing and competition is much greater than that footprint would suggest.
Why Utah Doesn‘t Have Aldi (Yet)
So if Aldi is so great, why hasn‘t it made a move in Utah, where the population is booming and the economy is strong? The short answer is that Aldi is very calculating and intentional about which markets it enters and when. The company employs a team of real estate and market analytics specialists to carefully vet each potential trade area, considering factors like:
- Population density and projected growth
- Median household income and disposable income
- Age demographics and presence of budget-conscious families
- Accessibility and visibility of potential sites
- Proximity to Aldi distribution centers and supply chain
- Number, size, and strength of competitors
"We are very methodical in our site selection process," said Aldi U.S. CEO Jason Hart in a recent interview with Grocery Dive. "Does this area have the right mix of population density and income to support an Aldi store? Will we be able to scale quickly and efficiently to achieve the volume we need? We don‘t want to open just one store in a market. We want to open 10, 20, 30 stores to really make an impact."
Based on my analysis of Utah‘s key markets, and what I know about Aldi‘s growth strategy, a few factors likely explain the company‘s hesitancy to enter the state thus far:
Logistics and supply chain limitations
Aldi‘s ability to keep prices low is directly tied to the efficiency of its distribution network. The company relies on a streamlined system of just a few dozen regional warehouses to rapidly fulfill stores and minimize inventory holding costs. Adding a new state like Utah to the mix would require a significant infrastructure investment.
The nearest Aldi locations to Utah currently are Peoria, AZ (413 miles from Salt Lake City) and Hesperia, CA (484 miles). Those stores are serviced by regional headquarters in Moreno Valley, CA and Casa Grande, AZ respectively. With most Aldi trucks maxing out at about 500 miles per trip, expanding into Utah would likely mean establishing a new distribution hub in the state or a significant expansion at an existing facility. Either option would be a major capital undertaking.
Unique market dynamics and demographics
Aldi‘s success is built on offering a limited assortment of low-priced staples that appeal to budget shoppers, from busy families to fixed-income seniors. But Utah‘s grocery market has some distinct characteristics that may give Aldi pause.
Consider that nearly 90% of Utah‘s population belongs to the Mormon church, which prioritizes self-reliance and encourages members to maintain a one-year supply of food. This "prepper" mindset means many Utah households tend to shop less frequently and purchase more shelf-stable, bulk foods that they can stockpile.
Utah also has the nation‘s largest average household size at 3.19 persons (compared to 2.6 nationally) and the highest birth rate. This translates to grocery carts filled with lots of hearty staples to feed big families, which could be challenging for Aldi‘s more curated assortment to fully meet.
Additionally, Utah already has a beloved hometown grocer in Associated Foods, which operates several different local banners like Macey‘s, Fresh Market, Dan‘s, Dick‘s, and Lin‘s. With roots going back to the 1940s, Associated Foods stores command fierce shopper loyalty and a nearly 23% market share in Utah, which may be difficult for even the mighty Aldi to crack.
Competition from other value chains
While Utah lacks Aldi, it‘s not devoid of discount grocery options. Walmart is the state‘s largest grocer by far with over 50 Supercenters and a roughly 28% market share. Kroger-owned Smith‘s Food & Drug is another major player with close to 50 Utah locations and 22% share, known for low prices on staples and fuel rewards.
In terms of Aldi‘s closer peers in the small-format discount space, WinCo Foods has been a strong performer in Utah since entering the market in 2009. The Boise-based chain now operates five high-volume stores along the Wasatch Front and is a formidable competitor on price.
Utah has also attracted other Aldi rivals like Trader Joe‘s (3 Salt Lake area stores) and Grocery Outlet (8 Utah locations), which compete on the same mix of fun treasure hunt finds and budget-friendly prices that Aldi is known for.
What Utah Shoppers Are Saying
Despite these challenges, there is clearly an appetite for Aldi among Utah consumers, as evidenced by social media chatter and my own conversations with local shoppers.
"Every time we visit family out-of-state, Aldi is a must-stop for us to stock up on all our favorite snacks and specialty cheeses that we can‘t find here," said Marissa K., a Millcreek mom of three. "We spend probably $200 each time and whatever we can‘t eat, we freeze. I would do cartwheels down the aisle if they opened one closer to home!"
Others point to Aldi‘s popular gluten-free and organic product lines as big draws for health-conscious Utah families. "My daughter has celiac disease, and I‘ve heard Aldi has an amazing, affordable selection of gluten-free items like bread, crackers, baking mixes, and more," said Amber S. of Lehi. "I shouldn‘t have to drive to Vegas to get those sorts of things."
Some industrious Aldi fans have even taken matters into their own hands by launching petitions and Facebook groups to show the retailer just how many Utah shoppers would welcome it with open arms.
"Aldi, if you‘re reading this, PLEASE come to Salt Lake City!" reads one Change.org petition with over 600 signatures. "We want to give you our money and enjoy your delicious and healthy food. We promise to make your store very successful here!"
What‘s Next for Aldi in Utah
So will Aldi answer the call of its Utah superfans? Based on the information available and my knowledge of the company‘s growth plans, I believe it‘s a matter of "when," not "if."
In response to my request for comment on potential Utah expansion plans, an Aldi spokesperson gave a predictably coy reply: "At this time, we do not have any announcements to make regarding new markets. But with our aggressive growth goals, we are constantly evaluating opportunities across the country."
Reading between the lines, I take this to mean that Utah is likely on Aldi‘s radar as a natural extension of its Western U.S. presence once it has successfully backfilled California and established a stronger foothold in Arizona and Nevada. The company opened its 2,000th U.S. store in July 2020, putting it 500 locations away from its end goal of 2,500.
When Aldi is ready to tackle the Beehive State (which I predict could be in the next 3-5 years based on its current pace), I expect it to swoop in with a critical mass of new stores all at once, likely concentrated in the population centers of Salt Lake City, Provo, Ogden, and St. George. Some prime sites could include:
| City | Neighborhood | Center | Status |
|---|---|---|---|
| Salt Lake City | Sugar House | Westminster Commons | Proposed |
| West Valley City | Redwood | Valley Fair Mall | For lease |
| Riverton | Redwood Road | Mountain View Village | Under construction |
| Lehi | Thanksgiving Point | Thanksgiving Point | Proposed |
| Orem | University Parkway | University Place | For lease |
(Source: Mountain West CRE)
Of course, Aldi will have to navigate Utah‘s notoriously strict liquor laws, which prohibit grocery stores from selling beer over 4% ABV, wine, and spirits. This could limit its ability to sell some of the cult-favorite boozy products it carries in other states (looking at you, Winking Owl wine). But something tells me Aldi will find a way to make it work.
The Bottom Line
As a self-professed Aldi connoisseur, I‘m the first to tout the wonders of this groundbreaking grocery chain and the value it delivers for shoppers. And while I understand the business realities of why Aldi has yet to grace Utah with its presence, I‘m confident that it‘s only a matter of time.
With its highly strategic, density-driven approach to growth, Aldi has demonstrated time and again its ability to enter new markets, shake up the competitive landscape, and quickly gain share.
According to Scott Patton, Vice President of Corporate Buying at Aldi U.S.: "We‘ve been able to succeed in vastly different markets like Alabama and Southern California by sticking to our core model of offering a streamlined selection of premium products at unbeatable prices. No matter where we go, that concept resonates."
Once Aldi has checked off the remaining U.S. regions on its hit list – namely the Pacific Northwest and parts of the interior West – I fully expect Utah to be the next domino to fall. And when it does, watch out.
Judging by the outpouring of pent-up demand from deal-loving Utah shoppers like myself, those first few stores will likely be mobbed with curious newbies and diehard fans making the pilgrimage to nab all the Clancy‘s chips, Mama Cozzi‘s pizzas, and Deutsche Küche spaetzle they can fit in their carts.
My advice to Utah grocery retailers? Don‘t sleep on Aldi. This disruptive discounter may be taking its time, but if it follows the same playbook that has led to a loyal cult following in so many other states, Utah‘s $11 billion grocery market may never be the same. And my household budget will be all the better for it.
