Aldi is pushing grocery prices down for rivals too

The fastest-growing grocery chain in the United States has no music, keeps product in shipping cartons, and stocks one version of most things. NPR's Planet Money published a piece on Tuesday by Alex Mayyasi asking how Aldi keeps its prices where they are, and the answer is useful for anyone who runs stores, supplies them, or competes with them.

The short version: the prices are not a promotion. They are the operating model, and the rest of the industry is now pricing against it.

How big this is getting

Aldi said in January it would open more than 180 U.S. stores in 2026, bringing it to nearly 2,800 by year end, on the way to 3,200 stores by the end of 2028, according to Supermarket News. Planet Money, citing Bloomberg, notes that would put Aldi behind only Walmart in store count. The chain is spending about $9 billion between 2024 and 2028 on stores, supply chain and digital, is entering Colorado with more than 50 planned stores and Maine with its first store in Portland, and will operate in 40 states. It is also converting the locations it picked up in the 2024 Southeastern Grocers deal, with more than 200 converted by the end of 2027.

Aldi U.S. CEO Atty McGrath said one in three U.S. households shopped at Aldi last year, and the company counted 17 million new customers. Planet Money puts 2024 U.S. sales at about $29 billion, more than Trader Joe's.

Cheaper than Walmart, or at least not more

Planet Money cites food reporter Deena Shanker, who comparison-shopped for months and found Aldi either matched Walmart's prices or came in slightly cheaper. That is the finding that matters, because Walmart sets the floor most grocers price against. If a chain with a fraction of Walmart's scale can sit at or under that floor, scale alone does not explain it.

The piece points to two mechanisms. The first is private label. More than 80% of what Aldi sells is its own brand, including look-alikes of national cookies and crackers, which removes the brand markup from most of the basket. The second is selection. Aldi stocks far fewer items and usually one version of each, so it buys in bulk, wastes less, and fits in a smaller box with lower rent and storage cost. The trade-off is real: shoppers sometimes have to go somewhere else for what Aldi does not carry.

On top of that sits the plain-store discipline. No music, no shelf dressing, product displayed in the carton it shipped in. The look is deliberate because every one of those choices removes labor. Planet Money notes Aldi is not alone in this kind of thinking; it cites a Hustle report that Costco redesigned a cashew container and cut 24,000 pallet shipments a year.

The rest of the aisle is responding

Planet Money reports Wegmans and Kroger have both announced defensive price reductions. Grocery Dive reported in May that Kroger CEO Greg Foran, in the job since February, plans sweeping price cuts to close the gap with Walmart, Costco and Aldi, with the cuts tested first and funded partly by importing more product directly and using technology better. Walmart, for its part, expanded its own price cuts to more than 7,000 items in May.

There is a measured precedent. Planet Money cites a late-2023 study of Lidl, the German discounter with a similar model and a much smaller U.S. footprint, which found that competing chains cut their markups by about 7% in areas where a Lidl opened. That is the spillover: a discounter does not have to take your customers to take your margin.

Why it is landing now

From 1960 to 2019, Americans spent a shrinking share of income on food, according to USDA data Planet Money cites. Since the pandemic that trend reversed, and food has become less affordable. A chain that has built 80 years of practice at selling groceries cheaply, going back to the Albrecht brothers taking over the family store in 1946, is arriving in new markets at exactly the moment shoppers are counting.

Planet Money also notes the pull is not only price. The rotating middle-aisle finds, premium apples and wine give regulars a reason to come in beyond the bill, and the piece describes customers lining up at new openings.

What to do with this

If you run a conventional grocer, the Lidl finding is your planning number: expect roughly 7 points of markup pressure in any trade area that gets an Aldi, whether or not your traffic moves. If you are a national brand, the 80% private-label share is the shelf you are not on. If you are a supplier or a landlord, 180 new boxes a year, three new distribution centers in Florida, Arizona and Colorado, and 50 stores in Colorado alone is where the construction and logistics demand is going through 2028.