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00:00:01
>> There's a brutal price war going on in US supermarket aisles and it involves a name few Americans recognize, Aldi. An import from Germany is so good at undercutting the competition that it's already surpassing Walmart at the go-to place for the lowest prices in the grocery aisle. CEO Jason Hart telling Reuters, his customers pay 21% less than at the rivals and he plans to keep it that way.
00:00:27
His strategy, shunning national brands in favor of private or exclusive labels, says Reuters retail correspondent, Nandita Bose.>> All the business model is very different than what a traditional retail model looks like. The assortment is very limited. It's almost 90% private labels. And that helps them keep their prices low, because they're keeping their supply chain internal.
00:00:56
They don't have pushback from a lot of these branded manufacturers, like say, Procter & Gamble or Unilever. And they're able to control their pricing, change their pricing whenever they think it is needed or they want to.>> And that's not all. There are no free bags for groceries.
00:01:19
Shopping carts cost $0.25, refunded only when carts are returned to the proper place. That frees up worker to focus on customer service and restocking instead of collecting carts. Products are largely left in shipping boxes, eliminating the need for a lot of time extra time and space which once again, keeps the lid on labor costs.
00:01:40
But Walmart is fighting back. Reuters reporting back in February of the discount giants price monitoring program, a push to squeeze supplies to lower prices and a $6 billion spending plan to regain the title as the low price king. But ALDI isn't backing down from the fight.>> Currently, ALDI has about 1,600 stores in 35 states in the US and they plan to open about 400 more stores and take their overall store count to 2,000 by the end of next year.
00:02:15
>> While ALDI fights it out with Walmart, there's a new contender already entering the game with the same strategy, LiDL. Another European grocer is setting up shop in the US and it too is ready to take food prices as low as they can go. Which could make survival in the grocery business even tougher.