Southern California is littered with the ghosts of supermarkets that tried and failed to conquer the region. Fresh & Easy came and went, as did Haggen.
Now it's Aldi's turn to try.
The German discount grocer opened eight Southland stores Thursday, the first of 45 locations set to open in the region this year. The initial wave is clustered around Aldi's regional distribution center in Moreno Valley.
In coming to Southern California, Aldi is venturing into one of the most ferociously competitive grocery markets in the country. Gelson's, Bristol Farms and Trader Joe's are local favorites. Dozens of farmers markets dot the region. Retail giants Wal-Mart Stores Inc. and Target Corp. have bulked up their grocery options, while huge online players Google and Amazon.com are expanding grocery delivery.
"The Southern California region is far and away the biggest market in the U.S.," said Burt Flickinger III, managing director of consulting firm Strategic Resource Group. Which also means, he said, it's "by far the most important."
Many grocers have underestimated the challenge of wooing Southland shoppers. Last year, Haggen closed its 83 stores in California mere months after they opened. That was followed by Fresh & Easy, the brainchild of British supermarket giant Tesco, which closed after losing $2 billion.
Those chains lacked a defining quality that set them apart and were also plagued with operational problems. Haggen, which was undertaking a huge expansion, alienated shoppers by erroneously overpricing products in some Southland stores. Fresh & Easy had long struggled with sending the right products in the right quantities to stores.
Known for quality products at deep discounts, Aldi's entrance into Southern California will raise the stakes for every nearby supermarket, with chains likely to drop prices in an aggressive attempt to either steal customers or hold onto their existing ones, analysts said. They expect that heightened competition to last for years.
Gordon Nesbit, vice president for Aldi's Moreno Valley division, said the chain has already been successful in such states as Texas and Florida. He's confident that shoppers here will also be won over.
"There's no doubt that Southern California is a competitive market, but it's also very competitive in pricing," Nesbit said. That is where Aldi plans to stand out — by offering goods of "impossibly high quality at impossibly low prices," he said.
After landing in the U.S. in 1976, the chain grew slowly for decades. In 2014, Aldi began expanding more aggressively, opening about 130 new locations a year, a pace it expects to continue until 2018. The company has about 1,500 U.S. stores, nearly all of them are in the eastern half of the country.