Mass CE + Appliance Retailers Face Battle With Lidl
Also expected to benefit from the entry of the mass retailer who was recently voted the UK’s best supermarket chain is real estate agents looking to lease large commercial real estate in key demographics.
Initially Lidl was going to open their new stores by late 2015, ChannelNews has been told that this has slipped into 2016. The new stores are expected to be located in Sydney and Melbourne initially.
Several distributors who source and supply house brand products to mass retailers in Australia have already been approached via their overseas representation offices to be a supplier to Lidl. Some of these distributors already supply Lidl in Europe.
ChannelNews has been told today that Lidl will go “smack bang up against stores such as Dick Smith, The Good Guys, JB Hi Fi and Betta Electrical.
Among the products and categories set to be sold by Aldi are digital cameras under the Silvercrest house brand, hard drives, hair dryers, electrical goods such as cords and lighting.
Branded products include Tefal, Olympus digital voice recorders, Remington and Panasonic health care products as well as a large range of small appliances from European appliance makers.
Consumer group Choice has welcomed the entry of another discount chain to take the fight to Coles and Woolworths. Choice’s recent supermarket basket survey found consumers could cut their grocery bills in half by shopping at Aldi.
Lidl is seen as the chief competitor to discount chain Aldi, which came to Australia in 2001 and now holds nearly 11 per cent market share on the east coast, with 370 stores across the country.
“It is good news for consumers that Lidl is planning to enter Australia. On the back of Aldi’s rapid rise, Lidl’s future looks bright down under as consumers seek out more affordable groceries,” said Choice spokesman Tom Godfrey.
“With our latest consumer pulse report finding 75 per cent of Aussies are concerned about food and grocery prices, this latest news will be welcomed by consumers struggling to make ends meet.”
In a note to investors last June, UBS retail analysts Ben Gilbert and Craig Stafford singled out the German discounter as one potential threat to Aldi in Australia.
“Lidl has done a very good job of taking a similar model and refined it to include a mix of private label and loved branded product in (often) more appealing store environments,” they wrote.
Mr Godfrey said for years shoppers had been bombarded by Coles and Woolworths jingles about how cheap their prices are, but with Lidl set to join Aldi, the prices at the big two “might actually start to go down”.
“We welcome the prospect of Aldi and Lidl taking the price fight up to Coles and Woolworths. The big supermarket’s loyalty programs might not look so flash when the German juggernaut comes to town.”
Last year, a report by Morgan Stanley argued Aldi had reached “critical mass” in Australia, or the point at which private label scale is achieved.
The entry of another “hard discounter” into the $90 billion Australian supermarket industry is likely to put further pressure on the margins of Coles, Woolworths and Metcash, which face high fixed costs compared with the Aldi and Lidl models.
Commonwealth Bank analyst Andrew McLennan told The Australian the two European discounters could together claim as much as 20 per cent market share.
Yesterday, Lidl was named Grocer of the Year for the first time in its 21-year history at the prestigious Grocer’s Gold Awards in London, stealing the title from Aldi.