Supermarket chain Aldi to open up to 50 stores across South Australia

Giuseppe Tauriello
February 12, 2013
adelaidenow

DISCOUNT supermarket chain Aldi will open up to 50 stores across South Australia, promising shoppers a new era of product choice and big grocery discounts.

The German giant yesterday announced it would spend hundreds of millions of dollars and create 900 permanent jobs in SA.

Planning Department officials will today meet Aldi executives to help identify sites for a warehouse and stores.

Premier Jay Weatherill said it was “great news for the retail sector and a huge vote of confidence in the strength of the SA economy”.

Aldi
Australia managing director Tom Daunt said the company was committed to expanding its footprint in SA after opening almost 300 stores along the eastern seaboard since 2001.

The chain will also enter the West Australian market, planning to build another 50 stores.

“The benefits associated with Aldi’s decision to enter into the South Australian market will be substantial, with hundreds of millions in capital investment, over 900 new permanent jobs and a final rollout of 40 to 50 stores across the state,” Mr Daunt said.

The company has not committed to a timeframe, but admitted the first stores were still “years” away.

Chief executive of consumer group Choice, Alan Kirkland, said SA shoppers could look forward to major savings.

“What is generally good for the market is more competition, which will lead to competition on price and an extended range of products,” he said.

“We’ve seen some products where Aldi has driven down the price by a very large amount. There will be pressure on other supermarkets to come down to those prices and Aldi can have a significant impact.”

Aldi opened its first Australian store in 2001, and quickly gained a reputation for its no-frills format. Store decoration and customer service is limited and most products are offered in large cardboard boxes and pallets.

An ACCC inquiry in 2008 found on average Coles customers paid more than 5 per cent less for home-brand products if they shopped at a store within 1km of an Aldi store, compared to Coles customers who shopped at stores without an Aldi within 5km.

Business SA chief executive Nigel McBride agreed that more competition meant lower prices in the short term but warned it could leave smaller retailers vulnerable. “Any global company that sees SA as a place to create jobs and make a major investment is headline good news but it will add to fierce competition in the retail sector, which includes online,” he said.

Senator Nick Xenophon said Aldi’s size and reliance on home brands could affect local farmers and food processors, given the weakness of food-labelling laws.

“Also, if you squeeze out independent retailers with an unsustainable price war, it will lead to greater concentration of ownership at the expense of local businesses,” he said.

Senator Xenophon said he would renew a push for the ACCC to be given power to break up companies that abuse market power, including predatory pricing tactics.

Mr Daunt said the retailer was committed to Australian-made produce. He said 100 per cent of Aldi’s fresh meat, 94 per cent of its chilled dairy and 97 per cent of its fruit and vegetables were Australian.

But Drake Supermarkets chief executive Roger Drake questioned that commitment.

“That is all spin – they’re a multinational company and their strength is in being multinational,” he said.

“My concern is that with the weak labelling laws it’s difficult for consumers to know where the product is coming from.”

Both Woolworths and Coles said they “welcomed” competition.