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Takeaway: Aldi/Lidl/Primark are striking rents for 'pick of litter' properties at a time when the $/foot is falling at the greatest rate since 2009.

Accelerating store growth at trough rents? Watch out… If you’re not paying attention to Aldi, Lidl and Primark’s push into the US – you should. SOME of the ‘real estate wasteland’ is actually finding a home – a good one. Successful or not, I don’t care. #disruptive. There’s always $ to make when we see disruption – both sides.

  • Growth plans for Aldi and Lidl are hardly part of the discussion as it relates to our conversations w investors on players like WMT, TGT, Amazon and Dollar Stores re growth in consumables. Howard Penney () has done a lot of work on Food (Re/De)flation and the traditional grocers – so definitely topical there.
  • Aside from the competitive dynamic, I’m also focused on the Real Estate and property considerations.
  • Aldi just announced plans to invest $5B and open nearly 900 stores and remodel 1,300 more in the US. 
  • Over the next four years it would put Aldi on track to become the third largest food retailer in the US by store count after Walmart and Kroger – w 2,200 locations by 2022 (not as far away as it sounds).
  • For those that do not know Aldi, the model is value, convenience, quality and selection w high percentage of private label -- think broader/deeper Trader Joe's.  Aldi offers more organic produce, antibiotic –free meats, and fresh healthier options at prices up to 50% lower.  It has a legitimate fresh produce offering. Nothing revolutionary there – but no less a threat.
  • Lidl is opening its first 100 stores on June 15th (ie Thursday).

The key is that these players are getting pick of the litter as it relates to locations, and are striking rents at a time when the $/foot is eroding at the greatest rate since 2009.

-- McGough