Aldi is closing in on $12 billion of annual grocery sales in Australian but despite closing the gap in its chase for Coles and Woolworths, there’s another potential competitor experts say is keeping the discount supermarket on its toes.
The latest survey of Australia’s grocery shopping habits from Roy Morgan saw Aldi pull firmly ahead of IGA when it comes to shopper expenditure, commanding 13.2% of the market and $11.9 billion in sales, compared with IGA’s 9.3% share, which is worth $8.4 billion in sales.
Woolworths held the biggest share of grocery sales over the 12 months to March 2017 at $32.2 billion, according to the research, while Coles collected $30 billion from customers’ wallets.
According to Roy Morgan, Australians spent $90.3 billion on groceries in the 12 months to March 2017.
Get business news first
Sign up to SmartCompany’s daily newsletter
Chief executive of Roy Morgan Research Michele Levine says it’s Aldi’s increase in market share, up from 12.5% a year ago, which stands out in the numbers.
Levine said Aldi has hit “a new high” with its sales growth, which speaks to its strong reputation as a customer-focused outfit, having won the Roy Morgan Customer Satisfaction Award for supermarkets four years running.
“The latest data shows Aldi retains the lead among the big four supermarket chains, satisfying over 90 percent of its customers overall, with — perhaps surprisingly — particular strength in meat and fresh fruit and vegetables,” Levine said in a statement.
The discount retailer is not just making moves towards produce: The Australian reports Kantar’s most recent mobile market research shows Aldi’s mobile offering has one of the fastest growing customer bases, increasing its market share from 1.7% to 2.8% over the past 12 months.
But an Aldi spokesperson told SmartCompany this morning the retailer is not focused on market share statistics.
“As a business, we are not focused on market share, but on providing great value to our customers. Aldi’s fundamental point of difference is our market leadership on price,” the spokesperson said.
The chain says it has invested “hundreds of millions” in new stores and store refits, and will continue with an “aggressive pricing reduction strategy”. It has also confirmed plans to open 120 stores across Western Australia and South Australia over the coming years.
The scale of this investment and the company’s recent logo overhaul might suggest the chain is energetically chasing the big two supermarkets.
However, retail expert and associate professor at QUT business school Gary Mortimer says that if you look to the US, the retailer’s strategy reveals a defensive move.
“So Aldi has been in the US since the mid 1970s, and [discount rival] Lidl has only just announced they will open 20 stores in North and South Carolina and plan to open 200 in the coming years,” Mortimer says.
“Aldi are investing $1.6 billion in the US to protect themselves against the arrival of Lidl.”
Similarly, Mortimer says reports that Lidl and German hypermarket Kaufland also have eyes on Australia will no doubt have motivated Aldi’s changes in store layout and new focus on fresh food.
While Aldi’s market share continues to grow, IGA’s shrinks; the Metcash-owned grocery chain lost 0.5% in sales compared with last year’s Roy Morgan numbers, while Aldi posted a 0.7% increase.
Mortimer believes it won’t be long before a fifth of Australia’s grocery budget goes to Aldi.
“I don’t think it will take long — I suspect in the next five years, Aldi will be 18-19% market share. They will certainly be looking at places like Darwin and Western Australia as they expand further,” he says.