Aldi stores are “cannibalising” each other amid rapid store expansion, say analysts
Tuesday, February 13, 2018/
German discounter Aldi has a strong track record of frightening the big Australian supermarkets with ambitious plans to capture customers, but a recent UBS report suggests the cult-favourite retailer might be eating itself.
The UBS Evidence Lab Grocery Competition Monitor suggests the impact of Aldi’s expansion into South Australia and Western Australia has been less than anticipated, reports The Australian.
Meanwhile, UBS analysts estimate around 78% of the chain’s east coast stores and 63% of the store fleets in Western Australia and South Australia are “cannibalising” sales from each other.
“Despite less than half the penetration of the east coast, a larger than expected number of Aldi SA/WA stores are cannibalising each other, with this impact accelerating in the fourth quarter of calendar 2017,” UBS analyst Ben Gilbert said.
The UBS report suggests these figures add further risk to more store openings that Aldi plans to complete on the west coast.
Since 2016, Aldi has championed its national expansion plans, and has previously committed to around 120 stores in the South and Western Australian markets. It currently operates close to 500 stores across the country.
The supermarket chain has also committed to store refurbishments and a new fresh food offering in its quest to capture more consumers from Coles, Woolworths and IGA.
It has shown it is a powerful force in the Australian grocery space: since launch in 2001, the retailer has built up to an estimated $11.9 billion in annual grocery sales, overtaking IGA’s takings of $8.4 billion in 2017.
Aldi now has a 13.2% share of the local grocery market, according to Roy Morgan data on consumer spending in 2017.
However, UBS analysts believe the impact of Aldi’s expansion into the South and Western Australia markets will be “less that expected, given the percentage of Coles/Woolworths/IGA stores currently competing with Aldi in SA/WA is not too dissimilar than the east coast”.
SmartCompany contacted Aldi but did not receive a response prior to publication.
LinkedIn engagement pods: Silver bullet or desperate ploy? Sue Parker DARE Group founder
Own it: The 10 things you need to do to manage your personal brand Lisa Stephenson Who Am I Projects founder
How to call your team into action with a winning presentation Emma Bannister Presentation Studio founder
The link between diet and mental health — and how to eat your way to wellbeing Kate Save Be Fit Food co-founder
From interactive videos to AI: The five marketing trends that will dominate 2019 Warwick Boulter Collaboro co-founder
Australia is leading the legaltech revolution, but what does this mean for lawyers, firms and clients? Jodie Baker Xakia founder
Why a video news release needs to be part of your PR strategy Leisa Goddard Adoni Media managing director
Want to catch more customers? Here's how to create a super sales funnel Jovana Vujnic Bumper Leads founder