Aldi plans to double market share, push store numbers past 400

Posted by Daniel Palmer on 21st January 2009

German-owned discount supermarket chain Aldi, which now has over 200 outlets in Australia, is continuing an aggressive store roll-out.

The company is currently building new distribution centres in Sydney and Melbourne to cope with the expected expansion, allowing it to double its impact on the Australian grocery market, according to The Australian.

The new warehouses in Sydney and Melbourne will be built over the next three years at a total cost of $500m, enabling the company to cater for 460 stores. At their current rate of expansion the 460 store milestone will be reached in around seven years, and could see them more than double their current market share of 3 per cent.

Managing Director, Michael Kloeters, described the pace of store openings as “frantic”, with 38 new stores last year, but said they would continue to stick to a plan of opening at least 30 outlets a year “for the foreseeable future”, The Australian reported. He added that the family-owned business had built annual turnover to somewhere in the range of David Jones and Myer, implying it was between $2.1 and $3 billion. As a means of comparison, market leader Woolworths last financial year reported annual sales of $30.5b in their Australian Food & Liquor division.

The company, which opened its first Australian store in January of 2001, still only operates in the eastern states and territories and will not extend beyond eastern borders in the near future, according to Mr Kloeters. Property price falls would aid growth, but “restrictive covenants” were still a concern, he added.

Since the Grocery Price Inquiry their expansion has gathered pace, with comments by the ACCC giving impetus to their push and bringing them priceless positive publicity. The competition watchdog suggested Aldi, which primarily sells private label goods, was having a “dynamic impact” on the grocery sector in Australia, forcing a competitive response from Coles and Woolworths. Comments from Consumer Affairs Minister Chris Bowen and results from the GROCERYchoice price survey gave further ammunition for their consequent advertising campaign, and unquestionably delivered the brand a wider audience.

The upbeat publicity has combined with an economic downturn, which has seen discount grocers become more prominent in a number of countries, to ensure that Aldi now has the perfect opportunity to become the ‘third force’ in Australia’s “workably competitive” grocery sector.