ALDI IN AUSTRALIA: WHAT WILL BE THE IMPACT?
May 2000
Aldi in Australia Aldi will become a small but significant player in the Australian market
OVERVIEW I. II. Aldi is the world’s lowest cost grocery retailer The United Kingdom provides an excellent model for the development of Aldi in Australia The arrival of Aldi in Australia will have a focused impact, felt mostly on key line pricing and by Franklins
III.
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Aldi in Australia I. Aldi is the world’s lowest cost grocery retailer – Ia. Aldi acts as a category killer in core grocery lines – Ib. Aldi has a low-cost logistics and operational system that works on a 12% gross margin – Ic. Privately owned Aldi has a long investment horizon and plenty of patient capital – Id. There are few threats to Aldi or the limited assortment store. Aldi is immune to competition, even from WalMart
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Aldi in Australia Ia. Aldi acts as a category killer in core grocery lines – Aldi is a limited assortment discount grocery store, a format characterized by a high turnover on a narrow range of grocery items in a small space – The main appeal of limited assortment stores is low prices – Packaged grocery accounts for almost 50% of a German Aldi store’s turnover and 50% of an American store’s SKU mix – In Germany, over 70% of German households shop at Aldi, mostly for basic staples
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Aldi in Australia Aldi is a limited assortment discount grocery store…
TYPES OF DISCOUNT FORMATS
Format Limited Assortment
# of Items 600-1000
Key Points Tightly controlled selection Focus on packaged groceries Emphasis on low costs 10-20% cheaper
Examples Aldi, Netto, Lidl, Norma, Save-A-Lot
Discount Supermarket
1000-3000
More flexible product selection Kwik-Save, Plus, More fresh, chilled and frozen Penny 5-10% cheaper Full product selection Discount perception Franklins No Frills, Food Giant, Colruyt Le Clerc, Intermarche,
Extended Range Discount
3000+
Source: NatWest...