Why Aldi could spell the end of IGA
New figures released from industry market researcher IBISWorld have revealed that Aldi continues to increase its domination over Metcash-supplied supermarket chains IGA and Foodland.
The German giant has increased its share of the $100 billion Australian supermarket industry from 7.9 per cent last year to 8.6 per cent today – a figure that is only expected to grow further.
Meanwhile, Metcash’s share has also increased, but only by a measly 0.3 per cent, and the experts say it’s only a matter of time before it falls even further behind the big three.
“The collective revenue from Metcash-supplied supermarkets has declined in 2016/17 and is expected to decline in 2017/18,” IBISWorld senior industry analyst Nathan Cloutman said.
“Aldi is rapidly expanding in the industry, in particular the company's move into WA and SA in 2016 has helped the company boost its market share recently.”
But it’s not just Metcash that’s feeling the pinch of the ever-expanding competitor. Coles, too, has been crippled under pressure from Aldi and Woolworths, trailing behind with 30.9 per cent of the market share compared to Woolies’ 36.8 per cent.
Unfortunately for Metcash, its attempts to boost revenue with price-match guarantees, discounts and advertising have had “minimal success”.
“The chain’s profit margins have declined over the past five years, as price discounting strategies have lowered profit margins across many of its stores,” Cloutman said.
Now, with the arrival and expansion of German “hypermarket” Kaufland, Costco and Amazon, the industry will only become more competitive – great news for us consumers, but not so much for our Aussie-owned chains.
Which supermarket do you prefer - Aldi or IGA/Foodland? Tell us in the comments below.