The major player currently is Walmart for most Americans. It's investing into online at a rapid pace, they recently added free online pickup for groceries and purchased Jet and Bonobos, so I think the real war will be between Walmart and Amazon/WF.

Value basics and speciality stores like Aldi and Trader Joes (which have very spotty coverage currently in the US) and regional full-inventory stores (Piggly Wiggly, Harris Teeter, Bi-lo etc) will pick up the crumbs.

I will bet against Walmart. They have a high cost structure for their existing stores which makes them vulnerable to hard discounters but they also invest a lot of money into their online ventures to fight Amazon. It's a battle on two fronts and will rip the company apart.

In the past, Walmart failed hard in Europe but ALDI and Lidl even conquered UK and Australia. As you might now, Europe is far away from a single culture and yet both chains were able to win in every country due to adoption and experience. While they are no franchise concept, there strategy reminds me of McDonald's.

Don't count out Kroger, the largest supermarket chain in the US. According to Wikipedia in 2015 it trailed only Walmart and Costo in worldwide revenue, and had 20% more revenue than Amazon.

https://en.wikipedia.org/wiki/Retail#Global_top_ten_retailer...

Kroger has some weak points: Only US, expensive store concept, many products. ALDI and Lidl are famous for their highly efficient lean store concept.

Amazon will capture the premium/delivery segment. ALDI and Lidl will capture the discount segment.

Kroger is right in between, a very, very tough position to hold.

Except for the majority of middle class people like somewhere in between. They can't afford premium, but want a little more assistance than ALDI.

Basically, there's three market segments, not two.

I doubt there will be a segment in between in the future.

In Germany even millionaire households shop at Lidl or ALDI because nobody needs 50 types of ketchup or milk. People don't like wasting lifetime when shopping and don't like to select one type of milk out of 20 different types in a wide price range that almost taste like the same. There is no USP for many different products except for their label/branding/image.

This transition took quite some time but the high turnover volume at hard discounters usually also means fresher vegetables and fruits.

ALDI and Lidl stores usually get supplies multiple times per day and have almost no local stock besides what's in the stores.

Yes, I agree. In the UK they had a bad reputation at first for being low end. Now a lot of the middle classes shop at the stores, the parking lot is often full of Audi's and other high end cars.

The quality of the food in general is very good, often better than the competitors, plus it's cheaper.

Keep in mind Aldi/Lidl have went from 0% marketshare in the UK to >12% in about 20 years - very impressive growth.

I agree. How could a store that has a full range of products, with many organic options, at reasonable prices not succeed as well.

Whole Foods is too pricy for me for a full grocery shop but I can afford and like to eat better than discount stores.

Going forward, I would bet on the middle market shrinking.

I wouldn't underestimate the number of people whose buying strategy is "cheap, but not the bottom".

ALDI and Lidl are not the bottom. In Germany they outperform traditional super markes in many quality tests. The key is the lean store/logistics scheme to reduce costs, not to sell crappy products. This combination is almost unbeatable, especially when carried out in a responsible manner: Only the right locations, own the property, no man in the middle (think of all the US high yielding retail mall REITs), only selective use of advertisement.

Yep. I grew up in a grocery store, and the chain eventually merged with Fred Meyer and then was bought by Kroger. Kroger allows every subsidiary to operate relatively independently. I wish we had more Kroger stores in the Bay Area actually, they are much better than Safeway.

The Kroger-based store where I live just botched a floor-plan change so badly I should hope that it was just a local screw-up. This particular grocery store went from okay to "penny-thriftstore" useless.

Kroger is the primary grocery store in my neighborhood and I shop there at least once a week. Despite that, I can never quite grok the store layout. It feels like it's been designed to make it impossible to find the last three items on your list so that you will roam the store endlessly picking up random impulse items while hunting your white whale condiment.

This makes me wonder, has anyone used the Walmart "drive-up" shopping system where you shop online, drive to a specified location and they load your groceries after you pay?

Almost all ALDI and Lidl stores have a nearly idendical floor-plan, at least when they have their own buildings and are not located in a mall or railway station. This usually makes shopping there a straight forward thing.

Walmart is the closest thing to "discount, no-frills" in the US, however it's 100% a facade. Their prices are realistically no better than chain grocery stores like Kroger, yet they do a very good job convincing poorer people that they are. Walmart is also really really gross. It doesn't matter where in the country you go, it feels like a hospital, and mysteriously the people always look like they're one stop away from one.

They spent a lot of money and energy trying to roll out in store pickup, 2 day pickup, and online grocery shopping, which I have been reasonably pleased with, but I think this is slowly becoming a death sentence for them. The one thing they're missing is the brand.

ALDI doesn't have as much dominance yet. Trader Joes has a bit more, and is all around a great store and reasonably priced compared to Whole Foods.

"Walmart is the closest thing to "discount, no-frills" in the US, however it's 100% a facade. Their prices are realistically no better than chain grocery stores like Kroger, yet they do a very good job convincing poorer people that they are."

I don't have a Kroger nearby, but WM is far cheaper than any other grocery chain in my area. I go to WM for all nonperishable items and then a more expensive store for fruits/veggies/meats.

Aldi/Lidl have really taken over in the UK in the last 10 years. I'm not really sure how they manage it - more, smaller stores?

Due to the intense competition in Germany, companies such as ALDI and Lidl are far more efficient than grocery stores in other countries, particularly the UK and US. Walmart tried to enter the German market years ago and was sent packing shortly after. The reason why the German stores are expanding is because there is very little profit to be made in Germany, whereas in other countries margins are much higher in supermarkets.

Also all three (Lidl/Schwarz Gruppe, Aldi Nord, Aldi Süd) are private companies and somewhat obfuscated. No shareholders demanding high dividend yield or quarterly forecasts. They operate in secrecy, even when the ALDI founders died, the most recent photos available to the public of both were made 30 years ago.

Small stores, mostly own labels and fewer employees. They buy only packages that don't need unpacking, saving a lot of time getting products on the shelf. Employees work all positions in the store so that shelves are filled when it's less busy and everyone is at the checkout when needed. That way no employee is idle, saving salaries.

In the UK they also profit from their European footprint. If you go somewhere else in Europe, you'll find that most products (nearly everything except for some food items) are the same as in the UK. They can buy in much bigger amounts than even Sainsbury's or Tesco as they operate in most European countries.

They also have barcodes on just about every side of the packaging. The cashiers don't have to figure out which side is the one with the barcode, they can just slide it across the scanner in whichever orientation it's on the belt. This makes checkout super efficient.

They also have very speedy checkouts, where the bagging is done by the customer at another table. This means one employee and checkout lane can do the work of three.

Also, I've heard they pay their staff the most out of UK grocery stores.

UK: I wonder about Waitrose and how WF was like it. Waitrose is owned and run as a cooperative, which I imagine is both unique and less easy for Amazon to buy.

This is only possible because they make their own products too. If you are Coke and need to compete with Pepsi you need to use the surface of your product to help with branding. If you are the only game in town you can have a white can covered in bar codes that says beer on the side.

Trader Joe's could also play a role. Basically also Aldi, just the other part (Aldi North whereas Aldi stores in the US are run by Aldi South). They have the money and motivation to really fight back and know how to achieve the same cost level as Aldi/Lidl.

ALDI Nord and Süd have some family issues and probably won't combine their US ventures. I see the Schwarz Gruppe (Lidl, Kaufland) as the biggest contender in the US. Kroger is probably gonna have a very bad time.

I didn't mean that they'd combine volumes, but both could fight for share. So you have 3 contenders, 2x Aldi and Lidl. Lidl probably has most money to spend but the US market is huge, they can all grow at their limits without threatening each other too much.

> ALDI/Lidl (discount, no-frills)

I really see this as the future. Not the whole foods, upper scale, and more expensive store; model. By and large, the middle class is shrinking and with automation looming, it will only get worse.