Discount Grocers Aldi And Lidl Give U.S. Stores A Run For Their Money : The Salt The grocery industry is in an intense price war. Two German competitors — Aldi and Lidl — are a major driving force. They're known for very low prices, and they're planning scores of new U.S. stores.
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Discount Grocers Aldi And Lidl Give U.S. Stores A Run For Their Money

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Discount Grocers Aldi And Lidl Give U.S. Stores A Run For Their Money

Discount Grocers Aldi And Lidl Give U.S. Stores A Run For Their Money

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AILSA CHANG, HOST:

There is an intense price war among U.S. grocery stores. One reason is competition from the German chains, Aldi and Lidl. They're known for steep discounts. Aldi sometimes sells eggs for 50 cents. And these German chains are planning hundreds of new American stores. NPR's Alina Selyukh reports.

(CROSSTALK)

ALINA SELYUKH, BYLINE: Picture opening day of a brand-new grocery store. It's pretty early, but there's a DJ, people mill about the parking lot. There's a bit of a line to the door, and one couple has staked out the first spot.

Why are you here?

ROY SPILMAN: Because we're crazy.

(LAUGHTER)

SELYUKH: Roy Spilman is very funny. He's here with his wife, Rose, and being first in line is kind of Rose's thing.

ROSE SPILMAN: Krispy Kreme.

ROY SPILMAN: Krispy Kreme - she won a year's supply of doughnuts (laughter).

SELYUKH: For showing up first.

ROY SPILMAN: Two and a half days she sat in front of the store.

SELYUKH: Wait, so how long have you been waiting for this store to open?

ROSE SPILMAN: Oh, not - just till 10:30 last night.

ROY SPILMAN: About 10:30 last night.

SELYUKH: The reason the Spilmans camped overnight is a new grocery store called Lidl. It's a first for this area in Manassas, Va. Rose is a huge fan of Lidl's rival, Aldi. And the couple is here to scope out the competition.

UNIDENTIFIED WOMAN: I have your very first gift card because you guys were the first customers.

SELYUKH: I want to go shopping with you guys.

ROSE SPILMAN: Sure, just don't add anything in the cart.

(LAUGHTER)

SELYUKH: Lidl is a German grocery chain that's just starting to break into the U.S. market. This is the company's 30th location with a plan of a hundred along the East Coast by next summer. I'm walking with Lidl spokesman Will Harwood past fresh tomatoes and bananas toward a fridge with black Angus beef. Harwood says typically a grocery store has about 26 aisles.

WILL HARWOOD: In Lidl, what we do here is six aisles, six easy-to-shop aisles.

SELYUKH: Shoppers familiar with Aldi would recognize the concept. Aldi has been in the U.S. since the '70s. It already has nearly 1,700 locations here. Both German chains go for a store that's compact, lean and efficient.

HARWOOD: By the time a customer reaches the end of this first aisle, they're going to typically be able to do about 80 percent of their shop.

SELYUKH: Both Lidl and Aldi spend a lot of time thinking how to cut costs and sell at the lowest prices. And as they're growing their footprint, industry analysts often cite them as a source of huge price pressure on the biggest supermarkets like Wal-Mart and Kroger.

JEFF BAEHR: Everything that we do within the store has a purpose, and that purpose generally is saving the customer because it's reducing some of the costs that we have in our system.

SELYUKH: Aldi Vice President Jeff Baehr is showing me around a recently renovated Aldi store in Alexandria, Va. He's naming a few efficiencies like 25 cent deposits for shopping carts that save employees the distraction of chasing down the strays or not wasting time on taking items individually out of their pallets or boxes to put them on a shelf. But the big things that let Aldi and Lidl save money are private labels and the limited assortment.

BAEHR: Because we don't have the 15 varieties of ketchup and the 15 sizes of pickles we can increase the volume on the one that we do have.

SELYUKH: So the stores tell suppliers, hey, we only want one type of canned beans in one size, but we'll sell a ton of it. That helps drop the cost of production and the cost at the store.

ROY SPILMAN: She wants that blueberry-filled doughnut.

ROSE SPILMAN: I love blueberries.

SELYUKH: Back at Lidl, I did go shopping with Roy and Rose Spilman. They bought some pineapples for 89 cents, some orange juice for about two bucks. Most of the prices were pretty comparable to Aldi's, though Rose, the grocery pro, has an eagle eye.

UNIDENTIFIED MAN: Strawberries.

ROSE SPILMAN: Aldi's was $1.77 (laughter).

SELYUKH: And this one.

ROY SPILMAN: One-eighty-nine.

ROSE SPILMAN: One-eighty-nine, so I know my prices (laughter).

UNIDENTIFIED MAN: She knows her prices.

SELYUKH: Some analysts predict that deep-discount grocery like Lidl and Aldi might grow five times faster than traditional stores. And if Aldi sticks to its five-year growth plan, it might become the third-largest supermarket chain in the country. Alina Selyukh, NPR News, northern Virginia.

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