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U.S. Retailers Facing European Retailer On Two Fronts

An interesting article in The Wall Street Journal today about the Aldi supermarket chain and the impact of the low cost retailer on British food retailers pointed out that the chain is expanding in the U.S. It’s surprising however, that there is no mention that Aldi’s owner, Germany’s Albrecht family, has already established quite a presence in the U.S. with another retail banner, Trader Joe’s, which has over 400 locations.

It is almost certain that every food retailer in the United States knows about Trader Joe’s, with its extensive private label assortment and “treasure hunt” atmosphere that Millennials, senior citizens and almost everyone in between seems to find appealing. It is a limited assortment supermarket, in many ways similar to the Aldi stores in the U.S., but with a significantly more upscale product mix although similarly targeted to budget conscious consumers. Those consumers’ shopping carts probably look much different, however, with the one at Aldi likely containing a gallon of milk priced lower than any other supermarket chain in the area, and the Trader Joe’s cart perhaps including a Crème Bruele frozen dessert that costs just a fraction of what the upscale restaurant down the street might charge.

The main point here is that the owners of both chains are really attacking the U.S. market on two very different fronts but with the same philosophy – give consumers a very no frills shopping experience where they leave feeling they have received good value and are not discouraged by the lack of choice as result.

The Wall Street Journal is correct in noting that U.S. food retailers are keeping an eye out for Aldi’s next move. But they should remember to look both ways, as Trader Joe’s could be coming in the other direction.