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.

Aldi is the world’s lowest cost grocery retailer

II.

The United Kingdom provides an excellent model for the development of Aldi in
Australia

III.

The arrival of Aldi in Australia will have a focused impact, felt mostly on key line pricing and by Franklins

Aldi

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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

Aldi

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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

# of
Items

Key Points

Examples
Aldi, Netto, Lidl,
Norma, Save-A-Lot

Limited Assortment

600-1000

Tightly controlled selection
Focus on packaged groceries
Emphasis on low costs
10-20% cheaper

Discount Supermarket

1000-3000

More flexible product selection Kwik-Save, Plus,
More fresh, chilled and frozen
Penny
5-10% cheaper

Extended Range