Woolies have a hard task ahead to get back to anywhere near the glory days. SP likely to stay down imo as opposition continue to take mkt share. from today's Oz:
Aldi refreshes fruit and veg supply chain
Aldi’s supply chain overhaul will take six to 12 months. Picture: Mark Stewart.
Customer needs.
The Australian
12:00AM September 13, 2016
Aldi will tackle supermarket rivals Coles and Woolworths head on by making a stronger pitch to shoppers who value quality fresh fruit and vegetables but have long viewed the German grocery chain as offering a poor alternative.
The discounter, whose market share is now pushing 15 per cent along the east coast, is overhauling its fresh food category and supply chain, to feed into more than 400 stores across Australia. In doing so it will move away from spot price contracts to longer-term deals and relationships with key agricultural suppliers. This shift to sealing deals with fresh food suppliers for longer than the typical three months, to cover more than a season or even annual contracts across multiple seasons, is a new move in Aldi’s strategy to improve the store’s reputation for the quality and variety of its fresh food.
The supply chain overhaul, which will take between six and 12 months to complete, will transform Aldi’s sourcing of fresh fruit and vegetables to something similar to its heavyweight competitors Woolworths and Coles.
Aldi has six locations around Australia that direct purchasing orders, with sometimes as many as six buyers responsible for a particular product, but under the restructure it will now be centralised to one central buying department with national responsibility.
Aldi will maintain some flexibility when it comes to sourcing from and supplying the states it operates in, but believes a central desk to direct the flow of fresh food across its store network will give it the edge it needs to change negative shopper perceptions about its produce.
Meanwhile, Aldi is also devoting more space to chillers in its stores, to widen its offering across categories such as dairy, and is moving away from dumping its fruit and vegetables in steel boxes on the shelf and instead using more shopper-friendly, aesthetically pleasing market stall crates.
The fresh food category is shaping up as the key battleground in the $90 billion supermarket wars, with Woolworths, Coles and grocery wholesaler Metcash pouring hundreds of millions of dollars into improving their fresh food offer by tightening supply chains, building relationships with key agricultural suppliers and refurbishing in-store displays — from shelving to lights — to better show off fresh produce.
A recent in-depth report from UBS analyst Ben Gilbert noted that while Aldi was winning customers at an accelerating rate, stripping shoppers from Woolworths, Coles and Metcash, its share of basket (proportion of household grocery bill) had been falling, partly because of its poorer fresh food offer.
“Some shoppers tell us (Aldi) is good for some things but not as a main shop,’’ Mr Gilbert said.
“Fresh appears to be Aldi’s main impediment to lifting share of ‘main-shops’, with fresh quality the No 1 driver of all shoppers to store, and the category shoppers tell us it is most in need of improvement at Aldi.’’
Since Aldi arrived in Australia in 2001 it has been a stunning retail success, opening up more than 400 stores along the east coast — capturing 11 per cent market share — and recently pushing into South Australia and Western Australia. UBS tips Aldi’s sales will grow 15 per cent a year for the next three years, representing as much as five times the rate of growth for the broader grocery market growth, to hit just under $15bn in sales by 2019. But fresh food has always been Aldi’s weakness in the Australian market. “The key reason shoppers do not purchase fresh at Aldi remains quality and a preference to shop at a specialist. Aldi is nearing a tipping point, but needs to get fresh right,’’ Mr Gilbert said, adding that “the tipping point in Britain proved to be when the discounters (Aldi and Lidl) lifted share of main shops to more than 10 per cent.
“Aldi is now at about 8 per cent in Australia. The key to lifting this will be fresh perception, which remains the No 1 category for improvement.’’
A UBS survey of shoppers in 2015 found that 75 per cent of respondents rated the quality of a supermarket’s fresh food offering as “very important”, beating other store attributes such as price, convenience, specials, fast check-outs and range.
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