New figures show why Aldi is getting fancier

BUDGET supermarket chain Aldi is looking more fancy these days and newly released figures reveal why Coles and Woolworths should be worried.

BUDGET supermarket Aldi is looking more fancy after launching posh new displays last month designed to lure higher income shoppers into their stores.

The launch of four attractive new “trial” stores in locations around Australia has sparked speculation the discount retailer will make a play for the “middle market” who traditionally shop at Coles and Woolworths.

At the front of the new shops, and at the forefront of the supermarket wars, will be fresh fruit and vegetables, which Aldi will use to attract the attention of passing shoppers.

While many people still see Aldi as a low cost retailer, a spokesman said figures show the number of shoppers from “high income” households had been increasing for years.

In a statement provided to news.com.au Aldi Australia noted that a Nielsen Homescan report showed just 30 per cent of its shoppers in 2014 came from low-income households, which it classified as those earning less than $45,000 per household.

Meanwhile, its proportion of “high income” shoppers, which it classified as earning more than $90,000 per household, had increased by 6.7 per cent since 2011, the highest growth rate of any supermarket retailer.

Just over a third, 34.3 per cent, sat somewhere in the middle.

“This means the majority of shoppers in 2014 were from high-income households,” the spokesman said.

Six weeks ago, Aldi launched four new trial stores, which some analysts believe indicates a move to capture the crucial “middle market” customers of Woolworths and Coles.

The new stores in Kallangur, Queensland, Chisholm in the ACT, McGraths Hill in NSW and Highton in Victoria, give shoppers access to more fresh fruit and vegetables, meat, dairy and freshly baked goods. These displays were also placed closer to the front of the supermarket to attract shoppers, and were complemented by better product displays, lighting, layout and check-outs. These improvements to the ambience of the stores are expected to appeal to households with higher incomes.

ALDI store at McGraths Hill.

ALDI store at Chisholm in ACT.

ALDI store at Kallangur, QLD.

An ALDI spokesman said the supermarket had already increased its gourmet range from 25 to 65 lines due to popularity.

“ALDI plans to continue to extend the Specially Selected brand during 2015, embracing the trend towards more premium food and drink options,” he said.

Last weekend the German retailer held its incredibly popular snow gear sale, which is also believed to have helped it reach out to middle and higher income families.

Since 2001, ALDI has opened 367 stores and has managed to capture 11.4 per cent of the grocery market across the eastern seaboard.

Professor Graeme Samuel of Monash Business School, said one of the reasons why shoppers liked ALDI was because it tended to offer lower-cost generic and homebrand products made from quality ingredients.

Its products have forced Coles and Woolworths to focus on their own homebrand products, improving quality and driving down prices.

In fact Professor Samuel, who was chairman of the Australian Consumer from 2003 until 2011, said that an inquiry into the grocery sector in 2008 found that wherever there was an ALDI present, prices at Coles and Woolworths tended to be cheaper.

People queue up for Aldi's annual snow gear sale at Kenmore. Pic Darren England.

Professor Samuel said that competition from ALDI was good for consumers, and that governments should not inhibit it.

“This is what competition is about, when they consider (restrictive) trading hours or laws, they need to remember the consumer suffers as a result.”

He said that removing restrictive covenants that Coles and Woolworths had imposed on leases to limit the opening of new supermarkets in shopping centres had also helped to improve competition in recent years.

But he said local and state planning controls were still a barrier to the opening of new stores, with retailers having to address environmental and traffic management objections.

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