KAUFLAND NOT A PROBLEM FOR ALDI
ALDI Australia chief executive Tom Daunt is not intimidated by the looming arrival of German retailer Kaufland, saying traditional Aussie supermarkets such as Coles and Woolworths will be more exposed.
Mr Daunt welcomes Kaufland’s entry into the Australian market and believes it will boost competition in the $90 billion sector, which in turn will be a win for customers hunting for cheaper prices.
Giant grocery chain Kaufland has $88.4 million in capital dedicated to establishing its presence in Australia and recently forked out $25 million to buy a 36,000sqm warehouse site on the outskirts of Adelaide.
Mr Daunt said Kaufland, which is part of the Schwarz Group — the fourth largest retailer in the world which also owns discount supermarket chain Lidl — was not a big threat to Aldi due to the differences in product range and floor size.
“They have a very large format so our business models are actually quite different … I would call them similar to be a cross between a traditional Australian supermarket and a Costco,” Mr Daunt told The Daily Telegraph.
Kaufland stores tend to stock up to 60,000 items and are spread out over 20,000sqm.
In contrast Aldi stores have about 1500 items and are spread over about 1000sqm.
“They are a large format and they do have a large product range, so I think more traditional supermarkets could be more exposed,” Mr Daunt said.
“I have read reports that they have purchased their first site in Adelaide, I think it will take quite a while for them to get up and running.”
Kaufland is reportedly scoping sites in Sydney and Melbourne and is in the process of compiling its Australian management ranks.
The arrival of the large format retailer, along with the pending arrival of Amazon and the growing strength of Aldi’s 500 stores, will put further pressure on Coles, Woolworths and IGA supermarkets.
Mr Daunt said additional competition was a win for consumers.
“Anything that brings more competition to the market and more choice is good for consumers, and that’s the business that we are in — which is trying to save money for customers,” he said.
Mr Daunt added that the current uncertain economic and political environment — characterised by rising electricity prices, low wage growth and the federal citizenship snafu — was actually working to the benefit of Aldi.
“If you combine what is going on economically and you combine what is going on politically, I think generally consumers are a little pessimistic,” Mr Daunt said.
“When people feel uncertain about what’s happening, they are definitely interested in exploring more value options …
“So we are a beneficiary of what’s going on more generally.”
(Kaufland) are a large format and they do have a large product range, so I think more traditional supermarkets could be more exposed Tom Daunt Aldi CEO