Aldi, which dipped a toe into Texas for the first time in 2010, now has a whole boot in, opening its 100th unit in the Lone Star state last week.
The store in Fulshear, near Houston, is one of 14 new Aldi locations scheduled to open in Texas this year, Karla Waddleton (left), vice president of Aldi’s Rosenberg Division, told Supermarket News. Aldi operates divisions in Denton, near Dallas, and in Rosenberg, outside Houston.
In addition to new stores, those divisions are expected to see about $100 million in renovations over the next two years, as Aldi expands room for fresh items and improves its shopping environment ahead of an expected move into the state from Lidl, its German hard-discount rival. According to Waddleton, Aldi intends to spend more than $33 million on renovations of 24 stores in Houston by 2018. In Dallas-Fort Worth, Aldi expects to spend $66 million on 54 store remodels by 2019.
Aldi’s new and remodeled stores are better suited to cater to today’s shoppers, including items like fresh fish.
“Stores will have a focus on fresh items, including more robust produce, dairy and bakery sections. Remodeled stores also feature a modern design, open ceilings, natural lighting and environmentally-friendly building materials, such as recycled materials, energy-saving refrigeration and LED lighting,” Waddleton said in an email. “The newly built and remodeled stores also have more room for a larger selection of fresh products, plus customer favorites like organics, gluten-free foods and premium baby items.”
Analysts consider Houston and Dallas to be among the country’s most competitive markets, due in part to the influence of local brands like HEB, which has leading share in Houston behind multiple store formats, as well as significant presence from large national chains like Wal-Mart Stores, Kroger and Albertsons.
Due to their small size and tight product selection, Aldi’s overall share of those Texas markets are still slim. In Dallas, for example, Aldi has nearly as many stores as Albertsons’ Tom Thumb chain, but controls about 2 percent of the market, compared with the larger rival’s 8 percent, according to Metro Market Studies. In Houston, Aldi’s share is about 1 percent, Metro Market Studies figures show.
What Aldi is developing, one local observer said, is a niche.
“They have certainly made an impact here in Houston,” Ed Wulfe, chairman and CEO of Houston-based real estate services firm Wulfe & Co., told Supermarket News. “They have established themselves as a very cost-conscious store for basics, with a lot private label, and there is a level of consumer that appeals to.
“The other advantage they have is that they can be nimble: With a 20,000-foot store, it’s easier to acquire the land or a building and build a store than would be for a grocer who runs a 50,000-, 80,000- or 100,000-foot store. So I think they’ve got a nimble niche: Because of their size they can slip them into neighborhoods that are underserved, or communities where a mayor could say, Aldi would be recommended for this project.”
Waddleton said the Aldi stores in Texas are making an effort to highlight local products in a way the company seldom did previously, with shelf tags calling out locally branded products and local growers of fresh items.
“Texas offers a lot of opportunity for growth,” she added. “When it comes to choosing store locations, we look at a lot of factors. We want the best sites that are closest to our shoppers and can support a high daily traffic volume. As the demand for Aldi continues to grow, so do our real estate options. Bottom line, we want to be conveniently located for our shoppers.”