Money Aldi stores are “cannibalising” each other amid rapid store expansion, say analysts

12:30  13 february  2018
12:30  13 february  2018 Source:   Smart Company

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Aldi stores are expanding rapidly in South and Western Australia, but the scale of the rollout may mean the stores are stealing sales from each other . “Despite less than half the penetration of the east coast, a larger than expected number of Aldi SA/WA stores are cannibalising each other , with

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<span style=The supermarket chain has also committed to store refurbishments and a new fresh food offering in its quest to capture more consumers from Coles, Woolworths and IGA." src="/upload/images/real/2018/02/13/span-style-font-size-13px-the-supermarket-chain-has-also-committed-to-store-refurbishments-and-a-new_540182_.jpg" />© AAP Image/Dan PeledThe supermarket chain has also committed to store refurbishments and a new fresh food offering in its quest to capture more consumers from Coles, Woolworths and IGA. German discounter Aldi has a strong track record of frightening the big Australian supermarkets with ambitious plans to capture customers, but a recent UBS report suggests the cult-favourite retailer might be eating itself.

The UBS Evidence Lab Grocery Competition Monitor suggests the impact of Aldi’s expansion into South Australia and Western Australia has been less than anticipated, reports The Australian.

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The expansion plan builds upon Aldi ’s announcement earlier this year that it will spend .6 billion to remodel 1,300 stores . The company currently operates just over 1,600 stores . “ We ’ re growing at a time when other retailers are struggling,” said Jason Hart, Aldi ’s CEO, in a statement.

" Each new store can take market share without cannibalising other Aldi stores , a dynamic Coles and Woolworths do not benefit from, owing to their existing nationwide footprints and higher store densities."

Meanwhile, UBS analysts estimate around 78% of the chain’s east coast stores and 63% of the store fleets in Western Australia and South Australia are “cannibalising” sales from each other.

“Despite less than half the penetration of the east coast, a larger than expected number of Aldi SA/WA stores are cannibalising each other, with this impact accelerating in the fourth quarter of calendar 2017,” UBS analyst Ben Gilbert said.

The UBS report suggests these figures add further risk to more store openings that Aldi plans to complete on the west coast.

Since 2016, Aldi has championed its national expansion plans, and has previously committed to around 120 stores in the South and Western Australian markets. It currently operates close to 500 stores across the country.

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" Each new store can take market share without cannibalising other Aldi stores , a dynamic Coles and Woolworths do not benefit from, owing to their existing nationwide footprints and higher store densities."

Aldi said it is expected to have a total of 2,500 locations across the U.S. by 2022. Its plan comes as another German discounter, Lidl, is set to open its first 10 stores in the U.S. on Thursday as part of a multiyear expansion .

The supermarket chain has also committed to store refurbishments and a new fresh food offering in its quest to capture more consumers from Coles, Woolworths and IGA.

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By 2015, those stores had stolen away a quarter of the overall market share from more entrenched chains. Like Ireland more than 16 years ago, the US is very much a blank slate when it comes to discount groceries—and analysts say they expect the American locations for Lidl and Aldi will be

The difference in price on individual products between the other grocery stores and Aldi IS that fee; it’s just spread out across items instead of added as its own It looks like a symbol for a Native American airline. (The hippie part of me is saying that’s racist, but I can’t figure out why, so I’m leaving it.)

It has shown it is a powerful force in the Australian grocery space: since launch in 2001, the retailer has built up to an estimated $11.9 billion in annual grocery sales, overtaking IGA’s takings of $8.4 billion in 2017.

Aldi now has a 13.2% share of the local grocery market, according to Roy Morgan data on consumer spending in 2017.

However, UBS analysts believe the impact of Aldi’s expansion into the South and Western Australia markets will be “less that expected, given the percentage of Coles/Woolworths/IGA stores currently competing with Aldi in SA/WA is not too dissimilar than the east coast”.


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Source: http://au.pressfrom.com/news/money/-55190-aldi-stores-are-cannibalising-each-other-amid-rapid-store-expansion-say-analysts/

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