PARDON THE DISRUPTION: 5 THOUGHTS ON ALDI’S MASSIVE ACQUISITION

The discount grocer is gaining hundreds of stores in prime locations. But integrating those traditional supermarkets into its operations will be tricky.

Like many people around the grocery industry, I was very surprised to see Wednesday’s announcement that Aldi plans to acquire the Winn-Dixie and Harveys Supermarket chains from Southeastern Grocers.

Although the discount grocer has been on a growth tear over the past several years, and a large, transformative acquisition certainly makes sense to further its conquest, snapping up two conventional grocery chains whose stores are very different from Aldi’s didn’t seem like a move that company would make.

From a growth perspective, this is a major step forward for Aldi in an area of the country where it has already built a considerable presence, including hundreds of stores and a brand new distribution center.

“These are great locations Aldi is getting,” according to one industry source I spoke to Wednesday who knows SEG’s store portfolio well and asked not to be named. “They’re a big reason why, even with the strength of Publix and Walmart, Winn-Dixie, Harveys and Fresco Y Más have remained.” 

But the tie-up raises some tantalizing questions over how Aldi will navigate the integration of two conventional grocery banners, and what this might mean for acquisition as a part of its growth strategy into the future. 

Needless to say, there’s a lot to unpack in this very eye-opening deal. Here are my five top-line thoughts:

This deal opens a new chapter in Aldi’s battle against traditional grocers.

Aldi has been operating in the U.S. for nearly half a century, but in the past several years it has been the most aggressive retailer in the country in terms of growth and store transformation. 

There are numerous factors behind this, and a big one is its rivalry with arch nemesis Lidl. Shortly after Lidl announced its entry into the U.S. in 2017, Aldi splashed cold water on the move by announcing a $5 billion investment to transform its position among U.S. grocers. Since then, it’s been a tale of two companies: Aldi has soared like a rocket, while Lidl has dragged like an anchor.

But Aldi has greater ambitions than just one-upping its German rival. As it has grown, Aldi has chipped away at the market share of traditional grocers, particularly during this extended period of high inflation that began early last year. Now, the discount grocer, which has focused mainly on organic growth, is opening a new chapter by acquiring the same sort of traditional supermarkets it’s trying to disrupt.