German discount grocer Aldi opening Northeast D.C. location

By Danielle Douglas
Monday, September 13, 2010

A new slice of competition has come to the D.C grocery market. Discount retailer Aldi plans to open a new store directly across from the Safeway on 17th Street NE, which long has had the neighborhood to itself. The next nearest food store is almost two miles away.

The no-frills, Germany-based retailer broke ground last week on its first location in the District, adding to its roster of 21 stores in Maryland and 11 in Virginia.

"Another grocery store in the area will help create better prices for residents," said D.C. Council member Harry Thomas Jr. (D-Ward 5). Aldi "will be like a neighborhood-based Costco's. And we can use that here."

Aldi's items are up to 50 percent cheaper than in traditional supermarkets because of its limited inventory and operational expenses, said Jeff Baehr, the company's local division vice president. Stores carry about 1,400 of the most frequently purchased groceries and household goods, most of which are under Aldi's own brands. At an average 10,000 square feet, Aldi stroes are more on par with the size of a CVS than a Giant. Customers are charged for bags, must leave a 25-cent deposit for carts and cannot pay with checks or credit cards -- cash, food stamps and debit cards are accepted.

All of these operational decisions have allowed Aldi to amass 1,100 stores in 31 states since it entered the United States in 1976. The company, which has its U.S. headquarters in Batavia, Ill., has opened 100 new stores every year since 2008 and is on track to hit that number again this year. Before the shovels hit the dirt at the D.C. site, Aldi had begun scouting additional locations in the area. Nothing has been secured yet, Baehr said.

For now, the company has its hands full with the Ward 5 site, which will house an 18,000-square-foot facility, featuring 9,000 square feet of retail space. The company purchased the vacant land for an undisclosed price. Baehr said the "density of population and high traffic" made the location particularly attractive. He expects the proximity of the Safeway will work to Aldi's advantage because of the built-in traffic.

"We're confident in our business model that we'll get a portion of those customers that regularly shop over there," Baehr said. "We tend to locate our stores near other retail centers."

The company anticipates hiring 15 to 25 employees from the surrounding community for the new store.

Aldi financed the project itself, forgoing the tax increment financing offered by the city, according to Valerie Santos, D.C. deputy mayor for planning and economic development. In recent years, the District has floated grant money from the Great Streets Initiative and other programs as gap funding for such grocers as Yes Organic Market. "The city is willing to assist retailers in any way we can, but all [Aldi] needed from us was help with permitting and curb cuts," she noted.

The company did take advantage of the Supermarket Tax Credit program, aimed at attracting grocers to underserved communities, such as Ward 5. The initiative exempts grocers from real and personal property taxes, sales and use taxes on building materials, and business license fees. In the 10 years since the program was established, seven grocery stores have benefited, including Harris Teeter and Yes Organic Market. There are now 51 full-service grocery stores in the District, compared with 34 in 2000.

"Whether it's an Aldis at the lower end or Whole Foods at the higher end, we need to rationalize the market so that people have choices," said John Talmage, chief executive of Social Impact, which in 2008 conducted a study looking at the uneven distribution of grocery stores in the District. "We need to find many different ways for families to manage their food security."

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