Coles’ and Woolies’ fears about discount retailer ALDI are fast being realised with recent revelations it has taken a much bigger bite out of the two Aussie retailers than first thought since launching in Australia in 2001.
The German-owned ALDI had come under fire from its two competitors for not disclosing its profits and how much tax it has paid on its Australian operations.
ALDI now command 11 per cent of Australia’s $90 billion food and grocery sector. And in bad news for rivals – and possibly agencies – it has announced massive expansion plans into the South Australian and West Australian markets, plus plans for new, standalone upmarket stores.
Many agencies have complained that the pricing war between the major grocers have squeezed FMCG client’s margins which has resulted in reduced ad spends.
To allay fears it’s not paying its fair share of tax in Australia, ALDI has announced that between 2010 and 2013 its sales rose from $3.14 billion to $6 billion and its Australian pre-tax earnings more than doubled from $121 million to $261 million in the same time.
Arguably, the German’s success has come at Woolies’ detriment who are suffering flatlining sales and have recently announced the departure of both its CEO and CMO. Woolworths has also been routinely beaten by arch-rivals Coles in the profit wars over recent years. To counter claims it’s the most expensive of the trio, Woolworth’s had ditched its “Fresh Food People” persona for “Cheap Cheap”with many insiders believing this has only worked to further damage the brand.
To add to Coles’ and Woolies’ woes, another budget grocer – the even cheaper German-owned chain Lidl – recently announced plans for a foray into the Australian market, although its exact plans and details remain sketchy.
In countering claims that the local operations of ALDI isn’t paying its fair share of taxes, CEO of its Australian operations, Thomas Daunt, argued that the grocer not only paid its taxes but since launching in Australia in 2001 had invested $4 billion into the local economy and had reinvested all of its profits back into its Australian operations too.