Aldi could almost double sales in five years, putting pressure on Coles and Woolworths, according to a report from investment bank UBS.
The report suggests that is Aldi fixes problems such as lengthy checkout queues – caused by the number of customers – out-of-stock items and the quality of its fresh food, sales could reach $13 billion.
The research is based on Aldi’s progress over the last few years and the shopping habits of more than 600 individual consumers.
Aldi could increase sales from $5.3 billion now to $9.3 billion by 2019 by opening new stores along the east coast, attracting more customers to existing stores and expanding into Western Australia and South Australia, which it plans to do by 2016, The Sydney Morning Herald reports.
“Aldi’s entrance into Australia has been an overwhelming success,” said UBS analyst Ben Gilbert.
Gilbert said the privately owned German chain could grow sales by at least 12 per cent a year over the next five years and have as big an impact on the Australian grocery market as discounters have had in the UK.
UBS estimates Aldi will take between $250 million and $350 million of annual sales from each of Woolworths, Coles and Metcash over the next five years. This will crimp same-store sales growth at the major chains by between 1.1 percent a year (Woolworths) to 1.8 percent a year (Metcash).
Gilbert said Aldi’s impact on the market would be even greater if it improved customers’ perceptions, which have deteriorated since a consumer survey by UBS in 2010.
The survey found that 52 per cent, or one in two shoppers, in areas where Aldi has stores have visited it over the past month.
The chain, which initially appealed to poorer consumers with a limited range of house-brand groceries and a low-price strategy, is now attracting wealthier consumers and young families with children, who have higher expectations.
“Aldi’s [perception] scores have actually declined regarding the quality of fresh foods, always in stock and fast and efficient checkouts,” Gilbert said. “These are three areas the majors, Coles and Woolworths, have invested money in because they see it as a key opportunity to differentiate.
“So there’s a big opportunity for Aldi to improve perception of fresh foods, improve checkout queue times and improve the in-stock position to drive more frequency of shop and higher spend in store.”
The UBS survey found shoppers who rated Aldi poorly spent $580 a year, those who rated them well spent $820 a year and those who rated them great spent $1900.
Asked to respond to the report, Aldi’s joint group managing director, Stefan Kopp, said UBS’s market share, sales and store numbers were “pretty much in the ball park”.
“Nine billion [dollars in sales] is achievable and slightly optimistic. I wouldn’t go beyond that,” he said. “We have 350 stores and we plan to open 25 a year for the next years. Most of those new stores will be fill-in stores and they’ll take some sales away from existing stores.”