U.S. Food Retail Market Attracts European Companies

Aug 17, 2015 4:00 PM ET

U.S. Food Retail Market Attracts European Companies

 

The U.S. retail food business is headed for another major, business model disruption. Driven by consumer demand for healthier foods, and for value pricing, this round of structural change has European discount food retailers expanding into the lucrative American market for organic foods, estimated at $33 billion annually. Aldi, a German-based company and one of the world’s biggest food retailers, has operated successfully in the U.S. with no-frills stores and a small assortment of products sold at very low prices. Its U.S. gross is eight billion annually, and is growing 15 percent a year. Now Aldi is going after the Trader Joe’s customer. The house brand, the SimplyNature all-natural and organic line, has become Aldi’s fastest growing brand. Aldi will have company in its new U.S. strategy: its principal competitor globally, Germany’s Schwarz Group, plans to enter the U.S. market with its Lidl shops that will offer fresh fish, upscale wine, and in-store bakeries at discount prices. Both companies feature small, easier-to-shop stores. Whole Foods has taken notice: it has announced 365, a new chain of smaller stores with lower prices for its private label, high-end foods.  This is one food fight that consumers will enjoy. I’m John Howell for 3BL Media.

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