Jun 12

Houston to be a part of Aldi’s nationwide expansion plans

Discount chain is eager to expand beyond its Midwestern stronghold, and its local growth has been speedy

By Dylan Baddour

Grocery discounter Aldi will invest $3.4 billion to expand its U.S. presence by 900 stores in the next five years, as the German chain looks to expand beyond its traditional U.S. territory in the Midwest.

Aldi, which operates without debt, has already orchestrated a swift expansion in the Houston area. It announced the grand opening of nine local stores in 2013 and now operates 32. The latest U.S. expansion was announced Monday.

“There’s no question about it, that’s an impressive number,” said Jason Baker, principal with commercial real estate firm Baker Katz. “It wouldn’t surprise me to eventually see Aldi with a couple hundred stores in our market.”

The chain is making waves in Houston, he said, by successfully pushing a European-style model of small-scale, no-frills locations in a market traditionally dominated by larger stores.

The company wasn’t immediately able to say how many new stores are planned for the Houston area.

Aldi’s expansion initiative comes amid the company’s ongoing $1.6 billion initiative to remodel 1,300 stores by 2020. If the expansion hits its target, Aldi will become the nation’s third-largest grocery chain by store count, though it will remain well below the revenue per store figures of its larger competitors.

“We’re growing at a time when other retailers are struggling,” CEO Jason Hart said in a statement.

During 2016, Aldi opened more U.S. stores than any other grocery brand, according to March report by brokerage JLL.

The expansion marks Aldi’s push southward and westward into new markets, said David Livingston of DJL Research. He said the chain began its U.S. presence in Ohio and Indiana in the 1980s, expanded in the Midwest and East Coast, and is now pushing into the South and the West.

The company’s secret: German-style efficiency.

“Aldi probably has the highest sales per labor hour of any other chain in the country,” Livingston said. “They can operate a supermarket with 10 or less employees.”

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