Aldi launches a new attack on Coles and Woolworths

Aldi is taking on Coles and Woolies with its first small-format store.

Aldi is taking on Coles and Woolies with its first small-format store. Photo: Twitter

A new era for Aldi in Australia is here, with the discount supermarket chain launching its first smaller-format convenience store.

Aldi is expected to open the doors of its first ‘corner store’ in North Sydney this week.

The format represents an embrace of a convenience strategy the two biggest supermarkets, Coles and Woolworths, have long banked on with their Local and Metro offshoots.

Aldi has kept details of the new corner store under wraps since it was first flagged in May.

“We know that Australians are looking for new and convenient shopping experiences, especially in densely populated areas, so we are exploring a smaller format store in North Sydney under a new store concept name: Aldi Corner Store,” an Aldi spokesperson said.

The small-format store will “offer a new store layout and more convenience-driven experiences to North Sydney shoppers”, the spokesperson said.

Aldi goes from innovator to follower

Since arriving in Australia two decades ago Aldi has cemented itself as a discount supermarket favourite for shoppers.

The German chain’s popular model has seen the nation’s two big supermarkets follow its lead.

“Aldi really has been an innovator in the market,” QUT retail expert Gary Mortimer said.

“It implemented lots of really interesting strategies that the big supermarkets have mainly followed, Special Buys and things like that.”

But Aldi’s new Corner Store is “obviously a replication of Woolworths’ successful Metro business and Coles’ Local business”, Professor Mortimer said.

The move follows Aldi’s recent decision to trial self-serve checkouts, and the prospect of the launch of an online shopping platform.

The firm has shifted from innovation to a “follower strategy”, Professor Mortimer said.

“They’re now starting to look at what the big guys are doing and replicating that,” he said.

Smaller-format stores “work well because they’re cheap to put in place”, Professor Mortimer said.

“They’re cheaper to run. You can put them into high-density areas where the per-square-metre leasing space is really expensive.”

Pandemic hits Metro stores

The nation’s biggest supermarket chain Woolworths currently has 84 Metro stores across the nation, with plans to open 30 more over the next three years.

But the pandemic has affected Woolworth’s rollout of its small-format stores.

Last month, Woolworths Group chief executive Brad Banducci revealed a write-down of $50 million on the value of 13 Metro stores, which followed the closing of three stores.

The stores considered at risk are located in CBDs or near major commuter hubs, which have seen foot traffic drop off due to coronavirus restrictions and the shift to working from home.

“Most Metro stores are in locations that have not been impacted by a reduction in customer foot traffic and continue to perform well, including new-look neighbourhood stores recently opened in suburban Sydney,” Mr Banducci said.

Rival Coles launched its first smaller-format store in Melbourne’s Surrey Hills in 2018.

There are now eight Coles Local stores across New South Wales, Victoria and Queensland, with the latest opening in the Brisbane suburb of Ascot in June.

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