A highly competitive German grocery store called Lidl has taken over Europe, and now it's planning to target the US.
Lidl, which will start opening stores in the US in 2018, is like a cross between Walmart and Trader Joe's.
The chain offers deep discounts on groceries, household appliances, clothes, and furniture.
As Lidl expands into the US, "grocery retailers should definitely be concerned, especially those who are currently struggling or whose stores are more conventional," Mike Paglia, director of retail insights for Kantar Retail, told Business Insider.
Walmart should be the most concerned, Paglia said.
"Walmart's Neighborhood Market could feel the greatest pressure of all, as Lidl stores will be of similar size, highly price competitive, and highly fine tuned to offer a relevant, convenient store experience," Paglia said.
Other retailers that will be particularly challenged by Lidl include Food Lion, Bi-Lo, Winn Dixie, and dollar stores such as Dollar General and Family Dollar, he said.
Many US retailers will be forced to lower their prices as Lidl expands, according to Neil Saunders, CEO of the retail consulting firm Conlumino.
"Lidl will provide a challenge — it will result in a number of retailers needing to reduce prices to stay competitive," Saunders told Business Insider.
But Lidl is more than just a discount grocery store.
The chain also offers appliances and furniture, and last year it made its first foray into fashion.
It debuted a women's collection in August 2014 that sold out within the first three days. The collection included a faux leather jacket costing 14.99 euros and chiffon blouses.
Since then, the retailer has launched a men's collection, a line of handbags, and a fitness brand.
Froman didn't provide specifics on what the US stores would offer.
"We have not announced our full product assortment," he said. "However, our markets will offer fresh meat, produce and bakery items, as well as a wide selection of household goods. We will carry Lidl's own premium quality brands as well as familiar branded goods, available at the lowest possible prices."
Lidl is known in Europe as a "rule breaker who is willing to try new things," and the chain tailors every one of its stores to the local market, Paglia said.
The stores in the US will most likely be about 33,000 square feet, or about one-fifth the size of an average Walmart supercenter, according to Paglia's estimates.
"Lidl has ton a tremendous amount of market research in the US already, has been hiring local talent, and its ability to localize its offer will be a huge asset in a market as fragmented as the US," he said.
Lidl and Aldi still have a small share of the UK grocery market — about 4.2% and 5.6% respectively — but their share of the market is growing and forcing traditional supermarkets into a crippling price war.
Lidl is expected to generate about $84 billion in sales in Europe in 2015, according to Kantar Retail.
It remains to be seen how the expansion of these discounters will affect American grocers.
But if Aldi's success in the US so far is any indication, then Lidl will most likely thrive, Saunders said.
The two brands are very similar and "they have grown hand-in-hand in the UK," Saunders said.
Aldi recently revealed plans to open roughly 600 stores in the US over the next three years as part of a $3 billion expansion, bringing its total number of stores to 2,000.
