Aldi

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Two Melbourne retail spaces securely leased to global supermarket giant Aldi have been listed for sale.
There's little doubt the most sought after will be the 1,650 sqm retail premises at <a href="https://www.realcommercial.com.au/for-sale/property-aldi-8-franklin-street-melbourne-vic-3000-503357750" target="_blank">8 Franklin Street</a> in the CBD (pictured top), given its high exposure of foot traffic due to its 25 metre frontage in the heart of the city.
The ground floor space which spans across the Verve and Milano twin-tower development is leased to Aldi who are on a 10 year lease with options to extend.
There's basement parking for 44 cars.
Colliers International agents Oliver Hay, Daniel Wolman, Chris Lin and David Sia are marketing the property for a December 6 auction.
The latest listing is a brand new space on the ground floor of Fitzroy apartment block The Lyric building (below), on the <a href="https://www.realcommercial.com.au/for-sale/property-239-245-johnston-street-aldi-fitzroy-vic-3065-503388222" target="_blank">corner of Gore and Johnston Streets</a>, near the busy Smith Street.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/11/13/Fitzroy%20Aldi.jpg" alt="">
Offered by Teska Carson's Adrian Boutsakis and Larry Takis, the 1,400 sqm floor space and 52 car spaces is leased to Aldi on a 10 + 10 + 10 year lease.
They pay $640,000 per annum and there are annual rent increases.
Aldi have over 10,000 stores worldwide. 
 
<a href="https://www.realcommercial.com.au/for-sale/property-aldi-8-franklin-street-melbourne-vic-3000-503357750"> </a>
<a href="https://www.realcommercial.com.au/for-sale/property-239-245-johnston-street-aldi-fitzroy-vic-3065-503388222"> </a>
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Two ALDI supermarkets in Melbourne for sale

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Crown Group has secured ALDI as a tenant of its Eastlakes Live residential precinct which it is developing on the Eastlakes Shopping Centre site.
The supermarket will re-open with nearly 20% more retail space and a fresh new look when stage one nears completion.
The new Eastlakes Live lifestyle precinct will offer more than 500 luxury apartments and an array of new retail and dining offerings that will transform the area into a destination in itself.
Stage one of Eastlakes Live by Crown Group was launched in May 2018.
Construction is underway on stage one, which will comprise three buildings with a total 133 one, two and three-bedroom apartments and four penthouses.
It will also have a 2800 sqm retail area below offering 12 outlets including the new ALDI store, a second supermarket, bakery, butcher and chemist.
Residents will have access to sophisticated resort-style health and fitness facilities including a 25 m swimming pool and gym. They will also have a rooftop lounge, barbeque facilities, function room and landscaped gardens.
Crown Group Chief Operating Officer Pierre Abrahamse said having a new, bigger ALDI supermarket was a major milestone in creating the new town centre, which would become a drawcard attraction for residents.
Amended plans for Eastlakes Live stage two are pending council approval and include 399 new apartments across five buildings and a concept for a new town centre, with a retail and restaurant precinct that includes a full-line supermarket and eat street offering various restaurant and dining options.
Apartments are for sale from $680,000 to $1,755,000.
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Crown Group secure ALDI as Eastlakes Shopping Centre tenant

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Woolworths has increased its lead as Australia’s top grocery retailer increasing its share of Australia’s total grocery market to 34% in 2018, up 1.4ppts from a year ago according to Roy Morgan’s latest survey data.
Their data showed, while Woolworths increased its market share the newly independent Coles now has a share of 27.6% of the total grocery market down 1.6ppts on a year ago.
 German supermarket chain Aldi has grown its market share to 11.4%, up 0.5ppts from a year ago.
Other Supermarkets outside the ‘big four’ such as 2018 Foodland, Foodworks and others increased their share of the total grocery market to 9.1% (up 1.2ppts) while IGA’s grocery share was down 0.4ppts to 7.1%.
Total grocery market – % market share 2017 cf. 2018
<a href="https://www.propertyobserver.com.au/images/2019/4/8/MARKET%20SHARE%20.png" target="_blank">Click here</a> to enlarge:
<img src="https://www.urban.com.au/images/2019/4/8/MARKET%20SHARE%20.png" alt="">
 
Source: Roy Morgan Single Source. 
Michele Levine, Roy Morgan CEO, commented that the impressive performance of Woolworths over the last year has Australia’s leading grocery retailer in a strong position to deal with the entry of German ‘hypermarket’ Kaufland into Australia’s $100 billion+ grocery market:
“Australia’s leading supermarket chain Woolworths has increased its lead in Australia’s increasingly competitive grocery market in 2018 now capturing over a third of Australia’s total grocery spend in 2018 – up 1.4ppts to 34% from a year ago."
“The successful year for Woolworths has been built upon strong performances across the four key categories of fresh food. Woolworths has grown its market share in dollar terms for fresh meat, fresh deli, fresh bread and also fresh fruit and vegetables and is the market leader in all four categories ahead of main rival Coles."
“The demerger of Coles Group from industrial conglomerate Wesfarmers in the December quarter of 2018 means Australia’s second largest supermarket chain now has the opportunity to refocus on its core business ahead of the imminent arrival of German retailer Kaufland."
“Kaufland has already bought six industrial sites in Melbourne at which it plans to open its successful ‘hypermarkets’ over the next two years before rolling out stores Australia-wide following in the footsteps of fellow German retailer Aldi. Aldi also had a good year in 2018 and grew its share of the total grocery market by 0.5ppts to a new high of 11.4%."
“In addition to Kaufland the Australian grocery market is also anticipating a rollout of the ‘Amazon Fresh’ brand in the near future after the American Internet giant launched a food and grocery segment (although not yet fresh food) in the December quarter 2018."
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Woolworths grew grocery market share to 34% 2018: Roy Morgan

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GUEST OBSERVATION
Dick Smith has laid the blame for closing his Australian-made processed food lines squarely at the feet of Aldi Australia.
He accused the German retailer of “extreme capitalism” and warned the CEOs of Woolworths and Coles that “unless your companies move towards [Aldi’s limited range and high proportion of private brands], you will very likely become uncompetitive”.
But this betrays a fundamental misunderstanding of Aldi’s strategy and the limits of its appeal in the Australian market.
An important element of Aldi’s strategy is a severely limited range of “preselected” products, overwhelmingly private brands. The company’s smaller range (some 1,500 store-keeping units as opposed to 20,000 to 30,000 in a large Coles or Woolworths outlet) has several advantages – in terms of store footprints, warehousing infrastructure and supplier discounts, to name a few.
A proportion of these savings are passed on to consumers to ensure their appeal with households wanting to stretch their shopping dollars further.
This strategy and disciplined execution propelled the company’s growth.
From its first two stores in the Sydney suburbs of Marrickville and Bankstown, Aldi gradually expanded across the eastern seaboard. It was not until 2016 that Aldi started opening stores in South Australia and Western Australia.
These new territories promised significant growth opportunities while store openings in the established territories were largely restricted to gap-filling.
By 2018, Aldi was operating more than 500 outlets around Australia and claiming roughly 13% of the Australian supermarket industry. Aldi’s gain in market share has overwhelmingly come at the expense of the smaller, independent supermarkets (IGA-affiliated as well as others).
Coles and Woolworths have chiefly responded to Aldi through price cuts and by boosting their share of private brands. While competition in the Australian supermarket sector has increased, it remains a lucrative oasis in comparison to international markets.
Low-hanging fruit is gone
As its stores now span the entire nation, Aldi’s growth can be expected to slow down. The company is unlikely to “turn on” and overwhelm Coles and Woolworths, as Smith predicts, because of the inherent limitations of the Aldi formula.
Aldi has successfully appealed to a particular segment of the market. It is a segment of shoppers prepared to trade low prices (coupled with sound product quality) for a variety of conveniences offered by traditional supermarkets. These shoppers readily accept Aldi’s highly restrictive range of product, the lack of manufacturers’ brands, and austere stores with minimal service at the cash register or in store.
The company has also been successful in expanding this segment, by convincing a growing number of people to do at least part of their shopping with Aldi and accept the trade-off at the heart of its offering.
But the majority of Australian shoppers prefer to do (the bulk of) their shopping with the two incumbents (Coles and Woolworths who still account for more than two-thirds of the market) as well as a shrinking number of independent supermarkets and a growing set of alternative sources such as farmers’ markets or subscription-based retailers (Costco).
Strategy has limits
Aldi exemplifies strategy scholar Michael Porter’s dictum that the essence of strategy is choosing what not to do. In embracing the “Aldi way”, the company has made hard strategic choices. Its strategy appeals to a sizeable segment of the Australian public.
But it’s turning away shoppers who value things other than what’s on offer at Aldi – larger choice, established brands, more service, plusher stores, in-store bakeries and delis or expanded fresh food sections. As a result, Aldi’s growth in Australia is going to reach its limits.
As far back as 2016, CEO Tom Daunt acknowledged that growth opportunities were slowing in existing territories. He also acknowledged the onset of cannibalisation between existing Aldi stores, a sure-fire indicator that their segment was becoming saturated:
"Increasingly those stores on the eastern seaboard are less often in virgin catchments and more often than not for the majority of those stores there is some impact on other existing Aldi stores."
A recent UBS report also picked up the increase in cannibalisation among Aldi stores. UBS analysts suggested Aldi store cannibalisation in South Australia and Western Australia was reaching levels not far behind the more established territories.
This indicates that saturation might be achieved sooner in new markets, and puts growth objectives in these states in doubt.
Since its arrival in 2001, the company has benefited the Australian public by injecting much-needed competition into the local grocery retail scene, thereby boosting Australian consumers’ spending power. While its success is testimony to the appeal of the Aldi formula, growth will inevitably peter out and the company will not overrun Australia’s existing retail giants.
<img src="https://counter.theconversation.com/content/100671/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">Aldi’s experience in Australia exemplifies the benefits as well as the limitations of clear and focussed strategy.
Tom Osegowitsch, Senior Lecturer, International Business and Strategic Management, University of Melbourne
Angela McCabe, Lecturer, Management, La Trobe University
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/the-secret-to-aldis-success-is-choosing-what-not-to-do-100671" target="_blank">original article</a>.
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