Will German discounters reduce Baltimore food deserts?

In the epic saga how food is sold in America the story doesn't follow a straight line in spite of there general trends:

• stores have become bigger and Wegmans with its suburban 100, 000 square-foot behemoth markets has taken the crown when it comes to size beating out even Walmart Supercenter grocery stores. 
• food store have started selling more produce and fruit and generally healthier food with an increased share in organics. 

  

  Lidl US prototype store

• many food stores have gone more upscale forcing old time players like Giant, Safeway and Kroger/Harris Teeter to become more like Whole Foods and Wegmans.

But then there are those disrupters which defy the trends. Only a few people know that three especially disruptive players all come from Germany and that they simply extended their ground-war there to the vastly larger United States. The store brands that buck the story line and sell food in smaller stores than even a traditional Giant (12,000sf vs typically about 40,000sf) and for lower prices than even those new Korean supermarkets (Lotte and Plaza) are named Aldi, Trader Joe's and Lidl, another German Discounter. Last year Lidl had announced its arrival with great fanfare (100 stores during the first year, see Forbes: Aldi vs Lidl: The Games begin in the US) but this year the company has already scaled back its attack after some disappointing initial sales and the uncertainty that Amazon's purchase of Whole Foods has brought to the grocery market scene. Lidl's slogan:

Our roots are European, but our vegetables are grown here. (Lidl website)

Baltimore food access and food deserts (Red)

The history of the older Aldi chain has a lot in common with the American discounter Walmart: Both chains were disrupters long before that label became common, both were founded by autocrats who named their business after themselves: Sam Walton creating Wal-Mart and Sam's Club and Theo and Karl Albrecht creating Al-Discount =Aldi. After a feud they divided Germany neatly into two halfs, with Theo owning Albrecht North and Trader Joe's and brother Karl owning Aldi South. Theo who died in 2010 was then ranked by Forbes as the 31st richest man on earth. Karl Albrecht died in 2014. Sam Walton died already in 1992, but his family is holding on to the Walmart empire and is considered the richest family in America. Sam Walton opened the first Wal-Mart in 1962, like the Albrecht brothers, he did begin his retail career right after WW II.

The early origins of the Aldi empire: Food and spirits

Both Walmart and Aldi can be called discounters and both have brought fear to their competition, their employees and their suppliers by governing with an iron fist and a single focus on lowering cost through increased efficiency. Both cater to the lower income masses but attract shoppers way into the middle class. Walton initially put his stores into underserved rural areas and Aldi into the urban fringes and suburbs.  Aldi came to the US in 1976. Walmart went to Germany much later and experienced a rare defeat there: The chain has 8,500 stores in 15 countries but was not successful in Germany and ended its presence there in 2006.

Aldi Sud's offspring, is Trader Joe's, an interesting twist on the Aldi success story in that it nurtures the very American brand of the western frontiersman, mixed up with Tiki culture, both non existing in Aldi's homeland. TJ's ties to Aldi are kept a secret, while the company spins on its website the yarn of the original Trader Joe who renamed the Pronto chain he had bought after himself (The first TJ store is still going strong in Pasadena). There are over 400 TJ stores in the US and no Trader Joe's stores in Germany. Trader Joe's has brought the discount idea of small stores packed with their own private label products to the wealthier areas by mixing the frontiersman concept with that of fresh and healthy food for better prices. Initially Aldi and Trader Joe's did not compete in the same market but now they do, both stores are a staple in the Baltimore suburban food retailer scene.

Aldi Catonsville

The Aldi chain owns over 5000 stores worldwide, with around 1,700 in the US. By 2020 Aldi wants to expand to 2,500 stores at a cost of $5 billion. Also part of the fortification: A  $1.6 billion face lift of most stores with new emphasis on produce. Should Aldi would meet its goal, it would make the German discounter the third largest grocery-chain in the US. The aggressive expansion is likely a reaction to competitor Lidl arriving at US shores. Lidl is also family owned and belongs to Dieter Schwarz, 78, a very secretive man who started his discount chain in 1973 following the footsteps of his father, also a grocer. Today Lidl beats Aldi with 10,000 stores in Europe, but inside Germany Lidle has only half as many stores as Aldi.

Lidl's plans are especially important to Maryland where the grocer had announced major investments, starting with a massive 800,000 sf regional headquarters distribution center in Cecil County, scheduled to open in 2018. Unlike Aldi, which is mostly hanging out in the urban fringe, Lidl has assured Mayor Pugh that they would consider placing up to five stores in Baltimore City, which would be a major success for a city permanently in search of new retail to locate in the city.

Aldi store in an underground shopping passage in Stuttgart, Gremany

How tenuous Baltimore City's position in retail is, can be measured with Target's  announcement this week that it would close its Mondawmin store. This is a huge blow to this rare urban retail center, West Baltimore and the entire city even though, Target does nothing to resolve food deserts. Lidl's big start in the US has not quite developed as planned and the company has reduced its presence in Georgia and also withdrew from a store in Prince George's County, according to the Washington Business Journal. A new announcement for an additional store in Lanham was made this week. The SUN had reported that the company would not confirm specific store sites in Maryland, but Aberdeen, Annapolis, Eldersburg and possibly Berlin on the Eastern Shore have been reported as possible sites.

Baltimore City is absent from that initial list. Urban locations are also in conflict with Lidl and Aldi's preferred US template of building stores from the ground up and snatching up real estate on under-performing commercial sites where other retailers failed.

The folksy aw-chucks image of Trader Joe's

In Germany both discounters often operate within larger mixed use buildings preferably located directly at subway stations, Often the store can be found in the lower level below department stores or other retail, as it  is common in Germany. The German discounter stores remain very frugal and bare-bones unlike Aldi's refurbished stores, and what Lidl has proposed as its US model. It seems to aim more for the Trader Joe's crowd. Several Aldi stores operate within Baltimore City, out on Fayette Street near Pulaski Highway, on Washington Boulevard and Cold Spring Lane but all are strip center type facilities within a sea of parking.

In principle, the German model of a smaller discount grocer with good fresh foods could be exactly what Baltimore needs. But before that happens, these chains would need to change their layout and design formula. Meanwhile, city shoppers need to drive to the outlying Aldi stores for decent affordable food.

Klaus Philipsen, FAIA

NPR: Discount Grocers Aldi And Lidl Give U.S. Stores A Run For Their Money