ALDI Is Taking Over the Southeast Grocery Market
ALDI just announced its next industry wake-up call, if you will, an agreement to acquire Winn-Dixie and Harvey’s Supermarket. A seemingly incongruous move as the leading small-store discounter enters the more traditional grocery area.
Under Jason Hart’s leadership, ALDI has become not just one of the fastest growing grocery chains in the United States, but his ambition is to spend billions to become the third-largest grocer in the United States by store count, as he discussed with me for a previous Forbes story. Their store count was 1,800 at the time, but they currently expect to have 2,400 by the end of 2023. Southeastern Grocers’ acquisition adds 400 Winn-Dixie and Harvey’s stores to ALDI’s portfolio.ALDI, known for its tight-lipped culture, has not disclosed the acquisition’s cost.
Southeastern Grocers, which emerged from bankruptcy in 2018, informed investors in March that comparable sales for the two chains increased 10% to $2.05 billion in the fourth quarter of 2022 and that it expected sales growth to continue. Over 80% of Winn-Dixie stores in Florida, Alabama, Louisiana, Georgia, and Mississippi have been updated or remodelled, with some stores, such as the recent opening in Hallandale Beach, Florida, showcasing a focus on fresh, prepared foods and demonstrating just how beautiful of a store environment shoppers desire. These purchases are in places where ALDI has effectively established stores, acquired market share, and converted shoppers, particularly Generation Z, to the ALDI not-so-secret sauce of quality, curation, and value.
More than 34% of the nation’s population growth is occurring in the Southeast, with an estimated influx of over 6 million people by the end of 2022, increasing the overall population to about 77 million people: a demographic match for ALDI’s growth strategy. The Ad Age-Harris Poll, which was performed in the fourth quarter of 2022, named ALDI as the number one brand that drew the most attention from this vital and food-focused generation.
Southeastern Grocers has tried (and cancelled) an IPO back in January 2012 and has been courting (and being courted by a number of chains) including KrogerKR +0.6% who saw the move as a way into the Southeast, particularly Florida where Winn-Dixie has the majority of its stores, so this move by ALDI may appear to be a bit off focus for both chains – until you look at the customers.