Aldi’s success in Australia has opened the door for another direct competitor, Lidl, now that Australian shoppers understand and trust the discounter model and house brands, says retail expert Associate Professor Gary Mortimer from QUT’s School of Advertising, Marketing and Public Relations.
“Aldi has created price conscious consumers who are now willing to purchase private label or house brands over national brands, and so they have made the way easy for Lidl, another German discount grocery chain,” Professor Mortimer said.
“Lidl is to Aldi, what Woolworths is to Coles - a much bigger competitor and as such will use economies of scale to keep margins necessarily low. While Coles has won the battle on profitability, Woolworths still has more stores and generates more revenue, something that should not be underestimated.”
Lidl is the world’s sixth largest grocery retailer with an annual turnover of US$82 billion while Aldi is the ninth largest with a turnover of US$73 billion.
“In the UK and Europe, it is quite common for a Lidl to be positioned close to an Aldi, the same way Coles and Woolworths have supermarkets in the same or neighbouring suburbs.
“Aldi’s aggressive push into South Australia and Western Australia is possibly about capturing as much market share as possible before their direct competitor arrives.”
Professor Mortimer said Aldi had legitimized private label products and forced traditional supermarkets to lift their game on quality and price.
“Shoppers today trust private label products more than ever before and so the proportion of private label on shelves continues to grow.
“Private label products account for about a quarter of grocery sales. This compares with more than 40 per cent in parts of Europe and almost 20 per cent in the United States, indicating there is room for expansion in Australia.”
Professor Mortimer said Lidl had already trade-marked their brand and product ranges in Australia but had, as yet, not confirmed a launch here.
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