Kroger has some weak points: Only US, expensive store concept, many products. ALDI and Lidl are famous for their highly efficient lean store concept.

Amazon will capture the premium/delivery segment. ALDI and Lidl will capture the discount segment.

Kroger is right in between, a very, very tough position to hold.

Except for the majority of middle class people like somewhere in between. They can't afford premium, but want a little more assistance than ALDI.

Basically, there's three market segments, not two.

I doubt there will be a segment in between in the future.

In Germany even millionaire households shop at Lidl or ALDI because nobody needs 50 types of ketchup or milk. People don't like wasting lifetime when shopping and don't like to select one type of milk out of 20 different types in a wide price range that almost taste like the same. There is no USP for many different products except for their label/branding/image.

This transition took quite some time but the high turnover volume at hard discounters usually also means fresher vegetables and fruits.

ALDI and Lidl stores usually get supplies multiple times per day and have almost no local stock besides what's in the stores.

Yes, I agree. In the UK they had a bad reputation at first for being low end. Now a lot of the middle classes shop at the stores, the parking lot is often full of Audi's and other high end cars.

The quality of the food in general is very good, often better than the competitors, plus it's cheaper.

Keep in mind Aldi/Lidl have went from 0% marketshare in the UK to >12% in about 20 years - very impressive growth.

I agree. How could a store that has a full range of products, with many organic options, at reasonable prices not succeed as well.

Whole Foods is too pricy for me for a full grocery shop but I can afford and like to eat better than discount stores.

Going forward, I would bet on the middle market shrinking.

I wouldn't underestimate the number of people whose buying strategy is "cheap, but not the bottom".

ALDI and Lidl are not the bottom. In Germany they outperform traditional super markes in many quality tests. The key is the lean store/logistics scheme to reduce costs, not to sell crappy products. This combination is almost unbeatable, especially when carried out in a responsible manner: Only the right locations, own the property, no man in the middle (think of all the US high yielding retail mall REITs), only selective use of advertisement.

Yep. I grew up in a grocery store, and the chain eventually merged with Fred Meyer and then was bought by Kroger. Kroger allows every subsidiary to operate relatively independently. I wish we had more Kroger stores in the Bay Area actually, they are much better than Safeway.

The Kroger-based store where I live just botched a floor-plan change so badly I should hope that it was just a local screw-up. This particular grocery store went from okay to "penny-thriftstore" useless.

Kroger is the primary grocery store in my neighborhood and I shop there at least once a week. Despite that, I can never quite grok the store layout. It feels like it's been designed to make it impossible to find the last three items on your list so that you will roam the store endlessly picking up random impulse items while hunting your white whale condiment.

This makes me wonder, has anyone used the Walmart "drive-up" shopping system where you shop online, drive to a specified location and they load your groceries after you pay?

Almost all ALDI and Lidl stores have a nearly idendical floor-plan, at least when they have their own buildings and are not located in a mall or railway station. This usually makes shopping there a straight forward thing.