Aldi's US Investment Highlights Global Trend

German retailer Aldi has committed US$3bn to increase its rate of expansion in the United States, as discount store chains try to take advantage of an ongoing period of global popularity.

The discount retail chain currently has 1,300 stores in the US, and now plans to open an average of 130 stores a year for the next five years. Aldi's US investment comes on the back of heightened expansion across many Western countries, as consumers continue to feel a squeeze in real income and a rise in living costs. While headline economic data is increasing optimism on a macro scale, living standards continue to fall across many developed economies. In the UK, real wages have fallen in 2013 for the sixth successive year, having declined by almost 10% since early 2008. The Office for National Statistics (ONS) also predicts that 2014 will see no real wage growth. Similarly, while unemployment in the US is falling, the majority of this trend has come from a rise in part- time jobs, rather than full- time, permanent contracts. At ground level, and for the average family, restored economic growth across much of the developed world is not being felt.

As a result, many stores in such countries have seen marked rises in sales of their own private label offerings, as reported by chains such as Safeway and Kroger in the US, Sainsbury's in the UK and Woolworths in Australia. Discount stores have benefitted from the global recession, and will continue to do so as a living squeeze continues. To 2017, we forecast that discount store sales will grow at a greater pace than total MGR sales in Australia, Germany, France, the UK and the US, among other countries.

Low Income Gains Boost Discount Store Sales
United States Discount Store Sales Growth & Real GDP Per Capita Growth (% chg y-o-y)

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This article is tagged to:
Sector: Food & Drink
Geography: United States

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