By Shan Li
1:26 PM PST, December 20, 2013
Supermarket chain Aldi plans to open 650 new stores in the U.S. the next five years, part of an aggressive growth strategy that includes building a regional headquarters and distribution center in Moreno Valley, Calif.
The expansion will be the budget grocer's first step into the Golden State. Most of its nearly 1,300 U.S. stores are on the East Coast or in the Midwest.
"We are eager to bring the Aldi difference to new markets like Southern California," President Jason Hart said in a statement. "We're ramping up our expansion plans to meet growing demand."
In the next five years, Aldi plans to open about 130 new locations a year, up from its average of 80 stores in recent years. The company did not disclose when or how many of its shops will be in the Southland, nor give a time line for the opening of its headquarters or distribution center.
Aldi is based in Germany and owned by the Albrecht family, which also controls the Monrovia-based Trader Joe's chain.
In recent years, Aldi has found success in the U.S. by attracting budget-conscious shoppers with low-cost, private-label items, analysts said. About 90% of the food and groceries sold at its stores are under exclusive Aldi brands.
By venturing into California, the chain will be stepping into a crowded grocery business that has seen increased rivalry from retailers such as Wal-Mart Stores Inc. and Target Corp., as well as dollar stores and drugstore chains. Amazon.com Inc. is also getting into the food game; it expanded its grocery delivery service to Los Angeles this year.
Some grocers have stumbled in the competitive environment. Fresh & Easy Neighborhood Market, controlled by British supermarket Tesco, filed for Chapter 11 bankruptcy protection in September after operating for several years without earning a profit. It is being sold to billionaire Ron Burkle’s Yucaipa Cos.
Industry watchers have said that grocery stores must increasingly differentiate themselves in consumers' eyes in order to succeed. One strategy, they said, is to go the Aldi route with more limited assortments and lower costs.
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