RetailWire, April 28, 2010

Wal-Mart Looks for Aldi-Buster Format

Wal-Mart benefited during the Great Recession as consumers traded down to its stores to buy everyday items at prices lower than where they had been shopping before. At the same time, it seems, some of Wal-Mart's shoppers were following a similar pattern by going to smaller, limited-assortment grocery stores such as Aldi and Save-A-Lot to reduce their food bills.

Speculation, as laid out in a Wall Street Journal report, is Wal-Mart may be looking to open its own small box format(s) to recapture lost customers while bringing in other price-value shoppers.

The Journal pointed to comments made last month by Bill Simon, COO of Wal-Mart, who said the company was looking for "more-efficient formats" in metropolitan areas around the U.S.

South of the border, Walmart de Mexico has seen growth rates beyond the U.S. business by operating seven different formats. The current chief of Wal-Mart in the U.S., Eduardo Castro-Wright, used to run the Mexican business.

Opinions differ on the nature of the threat to Wal-Mart from Aldi and Save-A-Lot.

"Aldi literally ran Wal-Mart out of continental Europe, and now they're taking the fight to Wal-Mart in the U.S.," Burt Flickinger of Strategic Resource Group, told the Journal.

Gary Stibel of New England Consulting Group sees a different scenario. "While the challenge for Wal-Mart will be retaining the new customers they gained in the recession, that challenge will be even tougher for Aldi and the other hard discounters," he said.