How Is Supermarket Player, Aldi Placing Itself Among Its Competitors?

  • May 02, 2019 AEST
  • Team Kalkine
How Is Supermarket Player, Aldi Placing Itself Among Its Competitors?

Aldi Australia, a German supermarket chain achieved a double-digit sales growth in 2018 with its gross sales revenue reaching $9.2 billion. In Australia, Aldi’s business model moves around providing fresh and healthy products and groceries at reasonable prices to customers.

Mr Daunt indicated that there was a substantial increase in Aldi Australia's net profit last year and the company captured 10.6 per cent market share in the Australian grocery market.

However, the chief executive of Aldi Australia, Tom Daunt is doubtful over the company exceeding the sales growth of 10 per cent in 2019. The company is unlikely to cross the 2018 sales-growth mark despite the benefits of additional customers due to house price declines and cost-of-living pressures. The company has been opening up around 20 to 30 stores annually and is planning to open about 20 stores this year. But if the store growth slowed in future, the sales growth would also be slower.

Mr Daunt mentioned that the company would not change its strategy because of new entrants like German discount retailer Kaufland (hypermarket player) in the market. The company will stick to its proven model. In his opinion, the new entrants face two toughest issues - finding the right sites and building a supply chain afresh.

Aldi Chief Executive does not see any threat from the Kaufland’s entry and believes that the consumers would benefit from the new competition. According to him, competition results in better quality products and more affordable prices.

Aldi believes that it could defend itself against any rival company due to its strong market position and efficient business model. The company’s objectives are not actually growth-oriented while the company focusses on improvement in its product range, expanding the quality range and further improving the price.

Woolworths Group Limited (ASX: WOW), Aldi’s competitor reported today that its quarterly grocery sales rose by 4.2 per cent in the third quarter. The sales from continuing operations rose to $14.9 billion from $14.3 billion a year earlier.

The company beats opponent Coles Group (ASX: COL) that posted a 2.2 per cent growth in adjusted comparable sales for the third quarter recently.

Aldi customers have saved more than $2 billion on their national grocery bill each year, states a new report compiled by business advisory firm PwC. The company has contributed almost $23 billion into the nation's gross domestic product from the time it entered into the Australian market, i.e. in 2001.

As per the report, the company has delivered the huge benefit of around $3.3 billion a year to the national economy (based on production and supply integrations). Mr Daunt claimed that the company has created the careers of several employees and has contributed to the national economy via the construction of stores, real estate, business partnerships, wages and taxes paid to the government.

The report highlights that the customers shopping from other significant supermarkets have saved $450 million a year due to price competition pressure from Aldi.


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