The great Aldi expansion is moving south-west with the German supermarket chain announcing today it will open 20 new stores in South Australia and a further 20 in Western Australia by the end of the year.
While it’s been great having Aldi in the Eastern seaboard states to break up the traditional supermarket duopoly, the move into WA and SA is a symbolic turning point for the Australian grocery sector.
The move into SA and WA will affect Woolworths and Coles, for sure, but these states have, until now, retained independent supermarkets, which have stronger support than independents in the eastern states.
It’s expected Aldi’s move into WA and SA will affect thousands of independent stores as much as the big chains.
Metcash, which supplies IGA, Foodland and other smaller chains, has been forced to write off more than $600m against the value of its flagship food and grocery division, according to The Australian.
But the chief executive of Metcash, Ian Morrice, said independent supermarkets in WA and SA have invested and planned ahead for Aldi’s eventual arrival.
He said these states boasted some of the “finest retailers in the country” and were better prepared than the rest of the country for battle.
“I think they are ready, able and willing to put up a big fight for the position they hold in the market. It’s not quite as commanding a position in WA, but nevertheless (they are) some of the best IGA operators in the country. And I think they have been gearing themselves up and getting equipped for new competition,” said Mr Morrice.
Aldi now has 350 stores, earning $5.3 billion a year in sales. UBS has forecast Aldi could snatch between $250m and $350m of annual sales from Woolworths, Coles and Metcash over the next five years. Since 2001, Aldi has opened up to 28 stores per year along the east coast.
While it’s been great to have Aldi help us break up the Coles-Woolworths duopoly, the German chain did not expand to this country for that reason – it came to make money. Will we still love Aldi if it wipes out our independent stores?
Tell us about the Aldi in your area – is it good for business? Do you shop there? Do you think the expansion into SA and WA is a good thing?