Lidl and Aldi is proving to be a strong rival for Wal-Mart Stores Inc (NYSE:WMT) in the UK and it plans to take the competition even higher by launching in the U.S.
Walmart might be a giant when it comes to the retail business but every once in a while it is reminded that the market is still quite competitive. This time it looks like Lidl and Aldi is the reminder, having gained significant upside over Walmart’s retail chain known as Asda in the UK. It is proving to be quite a tough rival for Walmart and has also managed to undermine the U.S retailer in Germany.
“Asda has posted its worst annual figures since being taken over by the American grocer Walmart, as fierce competition in the UK supermarket sector took its toll,” a recent report noted.
The report continued to point out that Asda has been facing stiff competition from Lidl and Aldi which has been encouraging major retailers to offer discounted prices. Asda’s defense was that it opted to avoid the price wars in order to protect its profit margins. This seems to have been a terrible move for the retail chain because customers are obviously attracted to the lower prices. This has been a major contributor to the poor results that Walmart has reported in the UK.
Lidl and Aldi to bring the competition to Walmart in the U.S
Walmart could be in even more danger if the current trend continues. Lidl and Aldi has plans to expand into the U.S, which means it will soon be playing on Walmart’s home turf. Its stores in the U.S will be smaller with few staff members and a smaller range of products. This combination seems to be a winning formula for the firm whose agenda seems to be taking the retail crown from Walmart.
Analysts are optimistic that the European discounters will continue employing their winning strategies in the U.S to take on the local competition. The same situation that has been happening in the UK is expected to take root in the U.S.
Walmart stock closed the latest trading session on Thursday at $80.87.