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Aldi Stripping House Brand Share Away From Mass CE Retailers

Aldi Stripping House Brand Share Away From Mass CE Retailers

New research from Moody’s claims that the rapid expansion of the German retail chain is stripping market share away from Woolworth and Coles as well as house brand share from the likes of Dick Smith, The Good Guys, JB Hi Fi and Harvey Norman, retailers who during the past 12 months have moved to expand their house brand labels in an effort to compete with Aldi.

Last week at the World Mobile Congress in Barcelona Matt Codrington the CEO of Lenovo the Chinese Company who 18 months ago took over the Medion brand who make PC’s that are primarily sold via Aldi in Australia said that the Medion brand was growing in Australia.

“We have witnessed growth across several Medion categories including mobile services”. 

Also benefitting from the growth in demand of consumer electronic products via Aldi stores is Sydney based distributor Tempo who supply the Bauhn branded TV’s, accessories and smartphones. At one stage last year Temp shifted 10,000, 55″ TV’s in 90 minutes. The TV’s were supplied by Tempo.  

Moody’s claim that Aldi is accelerating significant change in the retail sector and that during the past 12 months they have grown market share in the $88 billion market, particularly along the east coast of Australia.

Last week Moody’s released a report suggesting Aldi will soon begin to impact both Coles and Woolworths.

They said that the German retailer’s growth on the east coast will; rise 5 or 6 per cent a year over the next five years, double its forecasts for Woolworths and Coles, which have been increasing store space by about 2.5 to 3 per cent a year.

The two behemoths have been somewhat protected from Aldi before now because the German retailer has had a more limited product offering of the brands that customers want/trust. 

But Aldi has distinguished itself as the price setter in the grocery and consumer electronics business and as its expansion continues so will it drive competitors to meet it on price.

“Aldi’s increasing acceptance among Australian consumers and aggressive expansion plans are a long-term threat to the duopoly structure in Australia’s grocery market, which is dominated by Woolworths Limited and Coles,” says Moody’s.

Initially Aldi was best known for those strange weekly general merchandise offerings – the $200 TV, the $300 fridge and the super cheap pots and pans, now they are shifting large volumes of appliances, smartphones and consumer electronic goods with distributors now sourcing new categories for the mass retailer.