Dive Brief:

• Aldi recently opened seven additional Aldi Local stores in London, according to The Sun. This comes just three months after the discounter opened its first Local store, a 6,000-square-foot location in the city’s south end.
• The latest openings include a 5,000-square-foot location, Aldi’s smallest store in the U.K. Six of the stores are remodels of existing Aldi locations while one, located in Camden, is a new opening.   
• Aldi Local stores are smaller than traditional locations and offer 300 fewer products than a conventional Aldi. The new format also has fewer general merchandise items, stocks products that are less bulky and easier for city dwellers to cart around.

Dive Insight:

Representatives with Aldi U.K. told local news outlets the expansion of Aldi Local follows a successful first three months for the first rebranded location in south London.

But the decision may have more to do with what discount competitor Lidl is up to. Earlier this month, Lidl announced it will build 40 additional locations in London, including its first store in the city center. The discounter, which has around 60 stores in the U.S., has 88 stores in London and 760 throughout the U.K.

Both Aldi and Lidl have put the squeeze on conventional supermarkets, expanding their combined market share to nearly 15%. Tesco recently opened a scaled-down format called Jack’s in an attempt to fight fire with fire, while Sainsbury’s is also testing out a smaller-store format.

Although Aldi Local is an ocean away and still in the test phase, it’s not hard to imagine the format migrating to the U.S. in one form or another. Young consumers have migrated to urban markets in recent years, and retailers from Meijer to Dollar General have responded with new store concepts. Developers are looking to grocery stores to anchor residential developments, prizing the regular foot traffic they see.

Aldi Local stores are designed around specific shopping occasions, including small fill-in trips and meal stops. The assortment includes a range of fresh produce, a bakery and grab-and-go meals. Pack sizes are smaller and there’s less general merchandise than a typical Aldi. There’s also no parking lot.

Bill Bishop, chief architect with Brick Meets Click, said Aldi Local showcases the flexibility of the hard discount model.

"The store embraces the same operating and merchandising principles as their larger stores and stays true to the emphasis on ultra-low prices," he told Grocery Dive in March.

Bishop said he has "little doubt" Aldi will eventually move into U.S. cities when it's ready to do so.