Aldi will open a radical new store tomorrow which could be a gamechanger for supermarkets – but it’s a very big gamble indeed.
Supermarket giant Aldi is set to shrink in size with the opening of a new chain of convenience stores.
Called Aldi Corner Store it will be the first time in Australia that the German firm has operated under a format that differs from its standard supermarket.
The first store is due to open on Wednesday in North Sydney, just across the harbour from Sydney’s CBD.
A retail expert told news.com.au that the new concept store “made sense” but it was notable that Aldi the innovator was now “adopting a follower strategy” with a format that was similar to its competitors.
Corner Store is thought to be Aldi’s answer to the rapidly expanding fleet of Woolworths Metro and Coles Local supermarkets in Melbourne, Sydney, Canberra and Brisbane.
These stock a reduced range focused on food to eat immediately as well as ready meals, dinner ingredients and shelf staples. The Metro and Local stores often also feature an on-site coffee shop.
However, Woolworths’ and Coles’ smaller format stores are often as big as a standard Aldi.
A picture of the Aldi Corner Store signage was posted to a local Facebook group.
It’s not an entirely new store but rather is located where a longstanding Aldi supermarket formerly traded.
Aldi first talked about the Corner Store concept in May saying it would have a “convenience” offer.
“We know that Australians are looking for new and convenient shopping experiences, especially in densely populated areas, so we are exploring a smaller format store in North Sydney under a new store concept name: Aldi Corner Store,” a spokesman said.
The company said it would feature a different layout. It’s not known whether that will include special buys.
North Sydney is an alternative CBD for Sydney with large numbers of office workers. There is high usage of public transport in the suburb with customers less keen on doing a weekly shop.
Smaller format stores in trouble in CBDs
QUT retail watcher Professor Gary Mortimer told news.com.au that if Aldi was rolling out smaller stores it “made sense” because of the lower running costs.
“I imagine they are banking on the return to ‘localism’ we have seen. With continuing lockdowns, many of us are working from home and now shopping local.
“What is interesting, is that after 20 year of being innovators in the sector, they appear to be adopting a follower strategy. The roll out of self-service registers and dipping their toes into online, now Corner Store formats.
“While it makes sense to sit back and cherry pick the initiatives that work, the risk is that as you roll out you version, the market leaders have moved onto something else.”
Prof Mortimer added that Woolies’ Metro stores in CBDs, in locations similar to the new Aldi store, were suffering.
Last month, Woolworths said it had closed or would shut down 13 of its Metro stores in Sydney, Melbourne and Brisbane. Some are just a few blocks from one another.
A huge plummet in CBD footfall has left some of the stores with far fewer customers but still with high rents to pay.
Woolworths said the vast majority of its 80 Metro stores, which can also be found in suburban areas, would remain open.
“Sales in these locations (CBDs and transit hubs) have been, and remain materially negatively impacted by covid,” the firm said in a statement.
“While the group remains committed to the Metro food stores, it will record a non-cash impairment charge of approximately $50 million in relation to store and lease assets.
“This impairment charge reflects a balanced view of the speed of recovery of CBD and transit customer movements and the likely impact of this on Metro stores.
“While the group remains committed to the Metro food stores, it will record a non-cash impairment change of approximately $50 million in relation to store and lease assets.
“This impairment charge reflects a balanced view of the speed of recovery of CBD and transit customer movements and the likely impact of this on Metro stores.”
Extracted from News.com.au