Tags: Wal-Mart | Aldi | Lidl | Kroger

WSJ: Wal-Mart Braces for Competitive Onslaught From German Chains

WSJ: Wal-Mart Braces for Competitive Onslaught From German Chains
(Dreamstime)

By    |   Tuesday, 16 May 2017 11:38 AM

Wal-Mart Stores Inc., the world’s biggest retailer with $486 billion in yearly sales, not only has a massive rivalry with e-commerce giant Amazon.com Inc. but also faces growing competition from German store chains building up their U.S. businesses.

“Lidl, a German discount chain whose entrance in the U.K. in 1994 has helped upend that country’s grocery sector, says it will open 20 stores in Virginia, North Carolina and South Carolina by summer, with some arriving in the next few weeks,” The Wall Street Journal reported. “Two hundred or more are planned in the coming years, according to real-estate analysts.”

Aldi, a German discounter that opened its first U.S. store 40 years ago, plans to spend $1.6 billion to remodel and expand 1,300 locations and build 650 more by next year. Lidl and Aldi have about 10,000 European stores and $100 billion in yearly sales, the WSJ said.

“Lidl’s arrival and Aldi’s growth come at an already fraught time for the U.S. grocery industry,” the newspaper reported. “Food-price deflation has eaten into grocers’ earnings for the past 17 months as of April, the longest stretch of year-over-year declines in retail food prices since 1956.”

Doug McMillon, chief executive officer of Wal-Mart since 2014, told the WSJ that the company is working on product selection, price cuts and speeding up checkout lines.

Grocery chains also are preparing for the German assault.

“Kroger Co., the biggest U.S. supermarket chain by stores and revenue, in March reported its first quarterly decline in same-store sales in 13 years, while Publix Super Markets Inc. said this month its sales fell for the first time since the recession,” the WSJ said.

Kroger Chief Financial Officer Michael Schlotman said the company, which oversees the Harris Teeter brand of stores near Lidl’s planned stores, is looking to cut prices and ensure its private-label brands can compete with discounters.

The German stores may not have a big effect on the U.S. market, where chains have been locked in competitive struggles for years. Aldi has been here since 1976 and still only has 1 percent market share, according to investment manager Sanford C. Bernstein & Co.

“We’ve seen attempts to beat Aldi prices before, and we’ve always been able to go lower,” Jason Hart, CEO of Aldi U.S., told the WSJ.

It took Amazon 18 years as a public company to catch Wal-Mart in market value, but it took less than another two years for Amazon to be worth twice as much.

On the 20th anniversary of its IPO, Amazon’s market capitalization stands at $459 billion while retail rival Walmart’s is at about $228 billion, Recode reported.

Meanwhile, AFP reports that Wal-Mart, the 800-pound gorilla of retail, is running hard to catch up in an increasingly crucial segment where it is neither the biggest nor the best: e-commerce.

The company, founded in 1962 by Sam Walton, has been gobbling up smaller and niche players in e-commerce in an effort to reach online shopping market leader Amazon.

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Wal-Mart Stores Inc., the world's biggest retailer with $486 billion in yearly sales, not only has a massive rivalry with e-commerce giant Amazon.com Inc. but also faces growing competition from German store chains building up their U.S. businesses."Lidl, a German discount...
Wal-Mart, Aldi, Lidl, Kroger
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Tuesday, 16 May 2017 11:38 AM
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