Who Is Winning in US Grocery: Discount Stores or Warehouse Clubs?

Executive Summary

In this report, we review how discount formats and warehouse clubs are competing in the US grocery market.

• Warehouse clubs currently have a lead over discount stores in the online grocery market with a substantial investment in e-commerce and omnichannel capabilities.
• Discount stores are growing store numbers aggressively. Dollar General focuses on rural areas while both Dollar Tree and Family Dollar, with a combined strength of more than 30,000 stores, focus on urban and suburban areas targeting millennials.
• International hard discounters such as Aldi are investing to grow, too: Aldi plans to invest $5.3 billion to become the third largest grocer in the US by store count by 2022.
• Based on our research, discount stores currently have an edge over warehouse clubs in the areas of store openings, reach, operating and gross margin and overall impact on the sector.