Aldi to seize more market share from Coles and Woolworths

JOHN DAGGE
April 18, 2016
Herald Sun
Aldi will hit $15 billion in annual sales by the end of the decade, Morgan Stanley says.
THE challenge to Australia’s supermarket duopoly has only just begun with Aldi on track to grab 10 per cent of the nation’s grocery spending by 2020, a new report predicts.
Investment bank Morgan Stanley says the discount chain will hit $15 billion in annual sales by the end of the decade as it wins over growing numbers of Australian shoppers.
Retail analyst Thomas Kierath says the German grocer has demonstrated a clear ability to convert the initially curious into faithful regulars with the average amount spent by an Aldi shopper surging almost 70 per cent since 2007.
In contrast, the average amount spent by Woolworths and Coles shoppers has risen 18 per cent and 22 per cent respectively over the same period.
“Clearly, the headwind for the Australian supermarkets has only just begun,” Mr Kierath said a research note yesterday.
The amount of money Aldi customers put through its checkouts remains small compared with the outlay by shoppers at its larger rivals.
Morgan Stanley calculates the average Aldi customer spends $100 a month — well short of the $220 recorded by Coles and $258 by Woolworths.
But Aldi is gaining ground as shoppers start out by experimenting with low-risk staples such as sugar and dishwashing liquid before adding in dry grocery lines and finally graduating to fresh food.
“We do think that it can close the gap to Coles and Woolworths,” Mr Kierath said.
Morgan Stanley expects Aldi’s share of the grocery sector to rise from 6 per cent now to 10 per cent — worth $15 billion — by 2020.
It last reported sales of $5 billion in 2013.
The discount chain’s projected growth is also dependent on the rollout of stores in South Australia and Western Australia to match penetration rates already achieved in east coast states.
A detailed crunch of the nation’s supermarket habits by Morgan Stanley also shows Coles continues to monster its main rival.
Woolworths remains the nation’s biggest supermarket chain with 10.5 million shoppers traipsing up and down its aisles each month.
Coles boasts 10 million monthly customers while Aldi attracts 5.3 million.
But a Coles store averages 12,861 customers a month, while a Woolworths store only attracts 10,900 visitors despite being 6 per cent larger.
Coles has also lifted the average number of shoppers at each of its stores by 21 per cent since 2007, compared with a 5 per cent fall at Woolworths.
Coles also boasts higher sales per store than Woolworths.
“Coles has relied on higher visitation rather than more stores for sales growth,” Mr Kierath said.
Aldi’s visitation per store has declined by 2.6 per cent over the period as it rolled out new stores.
john.dagge@news.com.au