Expanding Walmart, Aldi Crowd a Fragmented Long Island Market

Walmart this week unveiled a 60,000-square-foot expansion of a discount store to a full-fledged Supercenter in Farmingdale, N.Y., bringing additional price competition to a rapidly evolving and fragmented food retail landscape on Long Island.

The expansion bolts a full-fledged and omnichannel-enhanced grocery store onto a 13-year-old discount store and becomes just the second Supercenter on Long Island, where the Bentonville, Ark.-based mass merchant has found expansion relatively difficult and mostly operates so-called “Division 1” discount units that have been widely converted to Supercenters in other markets years ago. It joins a recent rush of well-funded and price-focused players such as Aldi and Lidl expanding on the Island in recent months, many taking over space from faltering conventional rivals.

“This expansion of our Farmingdale store brings dramatic benefits to the entire local community, which is particularly exciting during these challenging times,” Store Manager Said Hasan said in a statement. “By increasing our grocery offerings and incorporating the latest innovations, we’ve made shopping even more convenient for our customers. And the entire area benefits from the hundreds of jobs we’ve created.”

The expansion allows the Farmingdale Walmart to offer fresh groceries for the first time, but also to potentially expand its reach through pickup and delivery services also coming for the first time there. The expansion is also allowing for the installation of a Pickup Tower where area residents can collect online orders for the first time.

The Farmingdale Walmart’s nearest food competitors include a Stew Leonard’s store and a range of independently owned markets, including Giunta’s Meat Farms, Key Food and Ideal Food Basket.

Several miles east along the Southern State Parkway, Aldi, the Batavia, Ill.-based discounter, last week opened its eighth store on Long Island and second this year, adding a new store in North Babylon at the site of a former Pathmark.

“Long Island is an important market for us, and we are proud to be opening our second new store this year,” said Chris Daniels, South Windsor division VP for Aldi. “Opening new stores and providing even more customers access to healthy, low-price groceries has always been one of our top priorities, and it’s more critical now than ever before. While food costs are rising across the country, our Long Island stores offer prices that are significantly lower than the competition.”    

Lidl U.S., the Aldi rival based in Alexandria, Va., is in the process of converting acquired Best Markets across the island to its banner, trumpeting effects of its pricing power on surrounding stores as it does so.

Market share data from Metro Market Studies indicates the price players still have a limited influence on the entire New York metropolitan statistical area, although it should be noted the market is enormous both in population and geographies, covering more than 20 million residents in four states, as a result, quite fragmented. Its 2020 Grocery Distribution Analysis and Guide figures indicate Walmart controls a 6.2% share of the market, Aldi 0.7% and Lidl 0.4%. Ahold Delhaize USA’s Stop & Shop banner is the market leader, according to Metro Market Studies, with a 14.7% share, or nearly twice that controlled by the region’s second-largest grocery seller, Costco.