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American consumers noticing an increasingly German flavor, sometimes literally, in their grocery shopping, are not imagining things.
Discount grocer Aldi’s recent announcement that it will acquire 400 Winn-Dixie and Harveys Supermarkets in the Southeast will instantly increase its growing market share, adding to German investors’ influence on U.S. grocery shopping choices.
The move will expand Aldi’s presence in Florida, Alabama, Georgia, Louisiana and Mississippi, with the grocer expected to end the year with more than 2,400 locations. Aldi CEO Jason Hart says it’s still up in the air which of those newly acquired 400 stores will be converted to Aldi and which will continue operating as Winn-Dixie and Harveys.
Aldi, owned by the German billionaire Albrecht family, has increased its Southeastern U.S. presence by purchasing market share, according to CoStar Group National Director of Retail Analytics Brandon Svec.
“Aldi is actively looking to expand, and targeting the Southeast, when market availability was at 3% and construction costs so high, made their building from the ground up very difficult right now,” he told Benzinga. “This was a pure market share play, and they gained 400 stores in one fell swoop. The (commercial) real estate read here is minimal as there are no expectations of closures.”
Asked whether this might be a shot across the bow to the dominant Publix Super Markets in the area, Svec said he believed the chain might be affected but that the overall goal for Aldi was pure market expansion.
“When you think about what flag supermarket will be most impacted, it’s Publix,” he said. “But I would read this less about engaging in direct competition and more about buying growth. They’ve gained market penetration in a high-growth area in the U.S.”
According to CoStar, Aldi has opened or signed a lease for a space at 117 locations spanning 2 million square feet in the last year. Svec said the only comparison to that rapid expansion is smaller coffee stores like Starbucks or discounters like Dollar General. Aldi is now the fourth-largest grocer in total square footage in the U.S. at a time when few other retail tenants are expanding.
Aldi is controlled by Germany’s billionaire Albrecht family, who currently own about 80% of the company through their various foundations. Another part of the Albrecht family also owns Trader Joe’s 569 specialty grocery stores while a separate German entity — the Schwarz Group — owns 181 Lidle US discount grocery stores, signing new leases on 19 spaces in the past year.
“The Germans are doing to our groceries what they’ve done to our automotive market,” Svec said.
This week’s Aldi acquisition is expected to close next year, and the company is working on a deal with the Federal Trade Commission that may mean it has to unload a few stores to get regulatory approval.
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This article The Germans Are Coming. Aldi’s Purchase of Winn-Dixie and Harveys Was Purely About Grabbing Market Share In The Southeast US originally appeared on Benzinga.com
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