German discount grocer Aldi said Wednesday it will open 100 new stores this year in the United States, continuing its rapid growth in the country.
Aldi, which has more than 2,000 stores in 37 states already, said its new stores will be located in Arizona, California, Florida and the Northeast region. The privately-held grocer says it’s on track to become the third largest supermarket chain behind Kroger (KR) and Walmart (WMT) in terms of store count, with 2,500 stores in the US by the end of 2022.
Aldi’s expansion comes as the coronavirus pandemic has boosted grocery chains. With many restaurants shuttered and consumers stocking up on food and grocery essentials to eat at home, sales at grocery stores increased 7.9% in December from the same month in 2019, according to the most recent data from the US Commerce Department.
Aldi has a low-cost business model and boasts that its prices are up to 50% cheaper than traditional supermarkets. At around 12,000 square feet, its stores are much smaller than a typical US supermarket of 40,000 square feet. More than 90% of the brands Aldi sells are its own private labels.
There are other quirks to the store, too. Shoppers need a quarter to rent a shopping cart. At checkout, cashiers hurry shoppers away to bag their own groceries in a separate location away from the cash register.
Aldi’s close competitor Lidl, another German grocer with a similar business model, is racing to grow in the United States, too. Lidl entered the country in 2017 and has more than 100 stores. In August, Lidl said it would open 50 new stores by the end of this year.
Aldi opened its first US store in 1976, but in recent years has invested more than $5 billion to remodel existing stores and to open hundreds of new ones.
But the company may face a tougher environment in 2021 than it did last year. Grocery sales are expected to fall 5% in 2021, according to UBS analyst Michael Lasser, with the arrival of the coronavirus vaccine and as consumers shift back to eating more meals away from home.
Aldi also said Wednesday that it will expand its curbside pickup offering to 500 additional stores this year. Aldi currently offers curbside pickup for customers at around 700 stores, and the chain separately has a partnership with Instacart to deliver groceries from most locations.
Online sales, which include curbside pickup, accounted for 21% of US grocery sales in 2020, compared with 4% in 2019, according to Lasser.