Aldi targets 3,000 U.S. stores to undercut major grocery chains

Aldi plans to operate more than 3,000 locations in the United States by the end of 2028, a figure that would place it behind only Walmart in total store count. The German grocery chain has become the fastest-growing major retailer in the country, driven by a business model that prioritizes low costs over extensive product variety.

In 2024, Aldi generated approximately $29 billion in U.S. sales, surpassing the annual revenue of Trader Joe’s. The company’s expansion has intensified competition in the grocery sector, prompting established chains such as Kroger and Wegmans to announce defensive price reductions to retain customers.

The retailer’s strategy relies on two primary operational tactics. First, more than 80 percent of the products on Aldi shelves are private label items, including store-brand versions of popular goods like chocolate sandwich cookies and crackers. By manufacturing these items in-house, Aldi avoids the markups associated with national brands. Second, the store maintains a limited selection of goods, stocking only essential items in single brand options rather than offering multiple varieties of the same product.

This limited inventory allows the company to purchase stock in bulk, which lowers the cost per unit. It also reduces the space required for storage and display, thereby decreasing real estate and labor expenses. Stores are kept small to minimize rent, and operational details such as the absence of background music and the display of products in original cardboard boxes are designed to cut overhead costs without reducing the price of food.

An analysis published in late 2023 focused on Lidl, a German grocer with a similar model, found that other grocery chains reduced their markups by approximately 7 percent in areas where Lidl stores opened. This price pressure extends to major competitors like Walmart and Costco, which traditionally rely on massive store sizes and economies of scale to offer low prices.

Aldi’s growth has been consistent since its founding in 1946, when the Albrecht brothers took over a small family store. The chain has maintained its focus on efficiency and limited selection as it expanded from post-war Germany to the American market. The company has adapted its offerings to appeal to higher-income shoppers by including premium wine and specific fruit varieties, while maintaining its reputation for bargain prices.

The retailer is scheduled to continue its expansion across the United States through 2028. Its stores are often located near competitor supermarkets, allowing shoppers to purchase the bulk of their groceries at Aldi and visit nearby stores for less common items. This positioning leverages the convenience of the existing grocery infrastructure while capturing market share through lower prices on staple foods.

Food prices in the United States have risen since the pandemic, leading consumers to seek out retailers that offer lower costs. Aldi’s model, which unbundles the traditional grocery experience by focusing strictly on cheap, high-volume items, has proven effective in attracting a wide range of customers. The chain’s approach demonstrates how operational efficiency and limited selection can compete with the scale of traditional supermarket giants.