Finance Finance News Discount chain Aldi ups ante in supermarket war
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Discount chain Aldi ups ante in supermarket war

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Discount supermarket chain Aldi is increasing the pressure on rivals Coles and Woolworths by expanding the fresh groceries sections in its bid to win a bigger slice of the fresh food market.

This will include the new stores the retailer is launching in Adelaide on Wednesday, opening its first four stores in the state, giving shoppers a taste of things to come as Aldi seeks to become an even bigger player across Australia’s fresh food sector.

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An industry insider told The New Daily that Aldi’s strategy is aimed at curtailing the number of its shoppers who buy their dry goods at its supermarkets but then purchase their fruit and vegetables at other competitors, including local greengrocers.

Aldi lifts quality control

According to the head of one of Aldi’s major suppliers, the German-owned retailer has stepped up its retail battle by telling its suppliers their private label products must be of exactly the same quality as their branded goods.

The New Daily
It’s all about quality now for supermarkets. Photo: Shutterstock

“We have been told we must provide Aldi with products for them under their brands that are as good as the products we produce under our well-known labels,” he said.

The supplier also noted that Aldi’s stance has since resulted in Coles and Woolworths changing their direction on private label products too, with the retailers relaying similar quality directives to their suppliers.

“This has all been happening in the last few months,” the supplier said. “It always used to be about price, price, price, but they [Coles and Woolworths] also now want the very best products. Aldi is effectively changing the retail landscape.”

An Aldi executive referred our questions to the company’s external public relations agency. The agency said Aldi would not make a statement in time for publication.

Australian expansion continues

Aldi will continue its expansion across Australia with the opening of its first four stores at Seaford Heights, Parafield Gardens, Hallett Cove and Woodcroft in Adelaide, which will be followed by another four next month at Modbury, Noarlunga, Mt Barker and St Agnes. The retailer has also just opened a new distribution centre at Regency Park in South Australia and is on track to expand into Western Australia in the fourth quarter of this year with a distribution centre and a spread of outlets across Perth.

Since launching its business in Australia in 2001 with two stores in Sydney, Aldi has grown its national network to more than 400 outlets and lifted its market share to around 10 per cent.

Figures released by the company last year as part of a senate inquiry showed that in 2014 its sales had grown to around $5 billion, and it had generated a profit of around $260 million in that year.

Aldi lifts advertising spend

In a further sign that Aldi really means business in Australia, figures released last week showed Aldi almost doubled its spending on advertising last year to $28.9 million from $15 million in 2014.

Data from research firm Neilsen showed Aldi’s advertising push has increased across television, newspapers, magazines, radio, out of home, cinema, online and direct mail.

hott-cross-buns-020415-newdaily
The battle of the hot cross buns is warming up.

Meanwhile, Coles’ marketing spend fell 25 per cent to $53.6 million last year and Woolworths supermarkets cut back their advertising by 5.3 per cent to $87.9 million, according to Nielsen.

The battle of the buns

Aldi has never been shy for a fight, and is set to open up a new front in its retail war.

Each Wednesday, the retailer announces its special buys for the week, and this time it includes hot cross buns. Aldi has a nine-pack of buns at the delicious price of $2.99, undercutting the $3.50 nine-pack bun specials on offer at the moment through Coles and Woolworths.

It’s just another example of Aldi’s fresh food firepower, and the retailer’s appetite for more market share.

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