“While we won’t know for sure how consumers will react to these changes until the upgrade and construction work has been completed, David Jones is trying to attract consumers at the high end of the market, rather than competing on price with the major players. “David Jones is expected to invest over $100 million on its food business over the next three years, with upgrades to its food hall already occurring in its Sydney Bondi Junction department store,” said Cloutman.
Kaufland’s entry is also expected to slow Aldi’s and Costco’s rapid expansion in the industry.”Īnother threat for the major players is David Jones’ announcement that it will launch a standalone food store in South Yarra, Melbourne, in 2019. “The entry of Kaufland will likely increase price competition in the industry, which will put further pressure on Coles and Woolworths to lower prices to maintain market share. “Kaufland is known for its aggressive price discounting strategy,” Cloutman explained. “However, with the rise of Aldi and Costco, and the expected entry of AmazonFresh and Kaufland, Australia’s grocery sector is likely to become more crowded over the next five years, with a handful of large companies competing for market share.”Ĭloutman said while Germany-based Schwarz Group has stated that Lidl is unlikely to enter Australia any time soon, the group is expected to launch Kaufland in the country in the near future, with the group already securing land for Kaufland stores in Melbourne and Adelaide. “The Australian supermarkets and grocery stores industry isn’t as crowded as in other markets, such as the United Kingdom, where there are numerous companies vying for consumer expenditure,” Nathan Cloutman, IBISWorld senior industry analyst told IRW. Online grocery sales are only expected to represent a small share of total grocery sales, at 3.0 per cent in 2017-18. Revenue in the online grocery sales industry is forecast to grow at an annualised 12.4 per cent over the next five years. Though Amazon entered the Australian market in December 2017, the US ecommerce giant is yet to launch its AmazonFresh brand here. Metcash’s market share is expected to total 7.4 per cent by the end of 2017-18. Meanwhile Metcash’s network of stores, such as IGA, are continuing to suffer as Woolworths, Coles and Aldi compete strongly on price. German grocery giant Aldi now has over 500 stores across Australia and its ongoing expansion is expected to earn the company 9.2 per cent of the supermarkets and grocery stores industry by the end of 2017-18.
Coles’ market share is expected to reach 30.3 per cent at the end of 2017-18. This follows on from a 0.6 per cent decline in real terms in 2016-17, after a period of heavy discounting by the major supermarket chains. The grocery industry is expected to grow by 2.2 per cent in 2017-18, largely due to rising demand for premium food products, such as organic fruit and vegetables.