Aldi's growth is worrying its big rivals

The staggering growth of the German supermarket chain's local operations shows the sector is a lot more competitive than many believe.

The Australian

Rivals expect Aldi to smash records on being the fastest retailer to top $5 billion in annual sales.

Which explains why Woolies boss Grant O’Brien is asked so often what he is doing about it.

His answer, just like that of John Durkan at Coles, is trying to improve his own offer.

A recent Nielsen study on Aldi says it now has sales of $3.5bn, excluding special buys, from its 395 stores on Australia’s east coast.

Not bad for a retailer which opened its doors in 2001 and which has exploded without the help of a recession, which propelled Aldi’s sales growth in the UK.

Analyst Greg Dring (now with Magellan Funds management) says Aldi has achieved the holy trinity of shopper metrics -- being shoppers in stores spending more and visiting more often.

In the 12 months to October, 52.8 per cent of Australian households visited an Aldi store. On the eastern seaboard that percentage was 68.2 per cent.

People are visiting Aldi 19.3 times a month against seven in 2001, when just seven per cent of households visited their stores.

High-income families now account for 50 per cent of shoppers, up from 26 per cent in 2006.

In all, Aldi has grown three times as fast as the big two supermarkets since 2009.

Aldi’s growth is also bad news for big-name branded goods suppliers, because Aldi specialises in house brand products.

At least its explosion can be used by the big two to show the market is a lot more competitive than the average politicians in Canberra will have you believe.

But when you are trying hard to match profit projections, as Woolies is, that is not a source of much comfort.

This piece was first published on The Australian Business Review

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