imcrookonit
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Aldi threat to grocery chains as Woolworths sales tipped to dip
The Australian
July 30, 2015
There could be more bad news in store for Woolworths, the nation’s biggest supermarket chain, after it was whacked by shoppers for its poor-quality fresh food on offer and relatively higher prices.
Sales are expected to slow at Woolworths at a faster rate than at its rivals, which could threaten the turnaround by the new chief executive when one is appointed to replace outgoing Woolies boss Grant O’Brien.
And once again, the biggest threat to Woolworths, and the other grocery chains, is coming from the rapacious Aldi.
German supermarket discounter Aldi has been labelled as “unstoppable’’ and its customers more loyal than any other, while flat like-for-like sales at struggling supermarket giant Woolworths is expected to continue for some time. Shoppers rank it last among the nation’s leading grocery chains when it comes to high quality fresh offerings, a UBS survey reports.
UBS surveyed 1000 shoppers across Australia about their spending habits, intentions and preferences in relation to the major supermarkets and US warehouse group Costco, and the results have underlined the huge threat Aldi now poses to all supermarkets across the $90 billion grocery sector.
As part of the survey, UBS interviewed Aldi, Coles, Woolworths and IGA shoppers and asked them their views across a range of store attributes for their main shop.
In an overall ranking, Coles was ranked first by Coles shoppers across areas such as fresh, efficiency, prices and reward card benefits while Aldi was ranked second and Woolworths third.
But across key metrics, the privately owned Aldi was seen to trounce the much bigger Woolworths and Coles, in the eyes of their own Aldi shoppers.
“There continues to be strong support from shoppers for a high quality fresh offering, with our respondents ranking Aldi best, then IGA (independent chains), Coles and Woolworths last,” UBS said.
“Secondly, it is critical that a supermarket’s value proposition resonates with shoppers. Aldi is the clear leader here, with Woolworths coming last and getting worse. Finally, shoppers are generally not loyal and have a growing propensity to cross shop, driven by greater choice and improved technology.”
A spokesman for Woolworths said: “Woolworths acknowledged at our investor day in May that we have work to do. Since this survey was taken in March, we’ve invested more than $170 million to lower prices … and have increased team hours in our stores. These changes are already making a difference and we are making good progress toward fixing the issues identified by us at that time.”
UBS said: “Excluding Aldi, for which we have upgraded our industry model numbers, the market will grow at 2.7 per cent suggesting flat like-for-like for the traditional — Coles, Woolworths, IGA — chains.
“By retailer the rate of share loss is expected to accelerate at Woolworths while Aldi/Coles should maintain momentum. We continue to believe it will take Woolworths longer and cost more money to turn around, suggesting further downside.’’
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