FRANKFURT, GERMANY -- Hard discounters Aldi and Lidl have risen to the top of the retailing heap in Europe by offering an effective store proposition that is increasingly accepted not only by the lower-income consumer that were the original target audience but by more affluent shoppers as well. The two have driven the share of hard discounters from 25% to 40% in Europe and are taking bigger chunks of the retailing scene in France.

While Britain and other European retail markets will see the bulk of further growth by hard discounters, their retailing model is quietly gaining in the United States with strong gains being posted by Save-A-Lot and Trader Joe's, which was purchased in 1979 by the two brothers who own Aldi.

Aldi, too, has been growing, if modestly, in the United States, but accelerated expansion may only be a matter of time. And, with well over 700 Aldi stores in 26 states and just over 200 Trader Joe's locations in 20 states already, the company has a critical mass that can help it grow effectively.

Still, it is in Germany where hard discounting is more advanced. Private label grocery and frozen food items dominated major hard discount operations with a strong presentation of general merchandise. Grocery products are sold directly out of the carton--a carton crafted to meet display and stocking needs--while perishables are largely confined to long, open refrigerated cases. The overwhelming majority of general merchandise items are displayed in wire baskets mid-store.

In recent visits to two stores in Frankfurt, Germany, it was apparent that Aldi was a bit more gm-oriented while Lidl leaned more toward food and consumables. SKUs are strictly limited. Lidl carries about 800 per store, for example, and Aldi 700. In the United States, Trader Joe's offers about 2,000.

Hard discounters have challenged hypermarket and supermarket operators throughout Europe. They have even forced traditional hypermarket leaders in France, including Carrefour and Auchan, to develop their own variations on the format.