Yahoo Finance Emerging player may disrupt Coles-Woolies duopoly
Supermarket giants Coles and Woolworths could soon see their duopoly in the Australian market disrupted thanks to the rise of a prominent third player.
Sales of German discount supermarket Aldi are expected to double in the next five years, according to a new report from investment bank UBS, reports the Australian Financial Review.
Related: Woolworths warned it's not a bank
Sales at Aldi are projected to increase from their current level of $5.3 billion to $9.3 billion by 2019 taking an estimated $250 million to $350 million of sales from each Woolworths, Coles and Metcash, which owns IGA.
According to the AFR, UBS analyst Ben Gilbert said that Aldi could lift sales by 12 per cent per annum over the next five years and consequently.
The projected increase is being attributed to the opening of more Aldi stores across the country and its strategy to target wealthier customers.
Aldi launched in Australia in 2001 and currently owns 350 stores across the country.
Related: The rise and rise of Australian supermarkets
In the pipeline are 25 new stores a year for the next few years, including plans to expand in Western Australia and South Australia in 2016.
The report from UBS also indicated the chain could reach sales of $13 billion, which would present a serious challenge to the stranglehold of Woolworths and Coles on the Australian grocery market.
Empire-building supermarkets
Over the last couple of years, Australian supermarkets – particularly Coles and Woolworths – have gone on an overdrive to diversify their businesses beyond retail, to cover a range of products and services.
From personal loans to pokie machines, car insurance to cuppa soup, they are out-competing each other to be present across a variety of consumer touch-points.
Coles has revealed it was considering becoming a member of the Financial Services Council, giving it a seat at the table among the nation’s leading wealth managers.
The supermarket teaming up with GE Capital in a plan to issue personal loans in a joint venture that will see the supermarket issue credit cards and other personal finance products, like small loans, from mid next year.
Throw in their recent venture into insurance and their daily financial products suite is also starting to look like that of a big four bank.
Related: Coles enters the banking game
Analysis by Commonwealth Bank a few years ago showed almost 40 cents in every retail dollar in Australia is spent at Woolworths or Coles (Wesfarmers).
“Both groups have been expanding their market share through a spate of acquisitions, which has given them an enormous concentration in our retail market,” said CBA’s retail analyst Andrew McLennan at the time.
And since then, those acquisitions have continued to grow. Woolworths’ brands now include Thomas Dux grocer, Big W, Masters Home Improvement, Dan Murphy’s, BWS, Cellarmasters, Langton’s, ALH Group and Ezibuy.
ALH Group has a portfolio of over 460 liquor outlets across Australia and 294 licensed venues, including Young and Jacksons in Melbourne and the Kirribilli Hotel and Crows Nest Hotel in Sydney.
These venues are home to an estimated 12,000 pokie machines.
Coles has got flybuys, Liquorland, First Choice Liquor, Vintage Cellars, Bunnings, Officeworks, Target and Kmart under its umbrella.
