Lidl is coming to America next month.

German Grocery Giant Lidl Is Coming to America Next Month. Is It Bringing a Price War With It?

German Grocery Giant Lidl Is Coming to America Next Month. Is It Bringing a Price War With It?

Moneybox
A blog about business and economics.
May 17 2017 4:43 PM

German Grocery Giant Lidl Is Coming to America Next Month. Is It Bringing a Price War With It?

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It's coming.

Jeff J Mitchell/Getty Images

Next month, something big is coming to the U.S. grocery industry. Lidl, a German discount grocery giant, will begin opening 20 stores in North Carolina, South Carolina, and Virginia on June 15.

Germany’s big competitor to Aldi (and “the younger, feistier fighter in Germany’s biggest little war”), Lidl will move aggressively to gobble up markets in the U.S. with its highly discounted off-brand goods. The company, which has roughly 10,000 stores in Europe, plans to open as many as 100 stores in the East Coast over the next year, according to Business Insider, and 500 more eventually.

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Lidl’s entry into the U.S. grocery market will likely have other retailers on edge. The long-opined decline in retail doesn’t quite apply to foodstuffs, despite Amazon’s best efforts. As Slate writer Henry Grabar wrote in April, “retail sectors with less developed online analogues—like grocery stores, gas stations, and car dealers—are chugging along just fine.” But that doesn’t mean the grocery world is thriving.

Supermarkets have been experiencing food deflation for a while now, meaning that as prices have been dropping, retailers have been engaging in price wars to gain a competitive edge. Introducing a powerful German chain that already specializes in deeply slashed prices—in some cases, half those of American retailers’ goods, according to Business Insider—won’t help these retailers who have already had to resort to layoffs and store closures. It could mean regional or smaller grocery chains could be forced out of the market. But it’ll probably be great for shoppers.

The new Lidl stores will sell fresh and organic foods in addition to standard grocery items, so they’ll compete with both traditional and specialized grocery chains. In statements to the press, the company has compared itself to Trader Joe’s—an assessment shared by Slate contributor Rebecca Schuman, who also makes note of Lidl’s history of bad labor practices and weirdly delicious snacks. The stores will also be relatively small—20,000 square feet—and sell mostly their own exclusive brands.

According to Bloomberg, Aldi has been preparing for this moment by expanding in California and pouring more than $1 billion into renovating its stores. In a statement to USA Today, the president of Aldi promised that the early-bird German chain would not be outpriced by the newcomer. “We’ve seen attempts to beat Aldi prices before and we’ve always been able to go lower,” he said. The Teutonic grocery price wars will be fierce.

Molly Olmstead is a Slate assistant social media editor.