New threats emerge to Coles, Woolworths

Posted by James Ferre on 22nd May 2008

The Australian supermarket industry, which some believe to be the most concentrated in the developed world, could soon have a third company emerge as a major player, according to Australian Discount Retail (Trading) Pty Ltd managing director, Peter Wilkinson.

Mr Wilkinson, whose company manages the Go-Lo, Crazy Clark’s and The Warehouse franchises, believes the increased public criticism of Coles and Woolworths is inviting competition. “My gut sense is that the market does not like two companies controlling over 70 per cent share,” he told the Future Retail Australasia conference in Sydney. “It’s a dangerous place to be for them (Coles and Woolworths).”

Mr Wilkinson did not name any contenders for the third spot, currently held by Metcash.

German discount retailer Aldi, which has almost three per cent market share via their 167 stores nationwide, has already flagged plans to roll out at least 400 stores in Australia with some retail experts believing 1000 may be their real target. The potential of Aldi to gain a foothold in the Australian market has been limited by legislation and the strength of Coles and Woolworths but, with the Government shining the spotlight on the major operators, perhaps Aldi could be the company to emerge as a major force in the next decade.

American warehouse retailer Costco, meanwhile, are still set to enter the Australian market sometime next year. Their mix of general merchandise and food products means that they are unlikely to pose a great threat to the dominance of Coles and Woolworths.