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The Changing Landscapes Of Australia's Supermarkets

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Over the next five years, the Australian supermarket landscape is set to evolve to accommodate the entry and aggressive expansion of offshore discount grocery retailers, a new CBRE Viewpoint report has revealed.

The traditional dominance of Coles and Woolworths, which held a market of roughly 75% at its peak, is now being challenged by the entry of discounter supermarkets Aldi and Costco.

Over the past 15 years, Aldi has rolled out more than 360 stores nationally, contributing to 10% of total market share, and has plans to open a further 150 stores over the next five years, with a strong focus on Western and South Australia. Similarly, Costco has also expanded with seven warehouses nationally since its entry into Australia in 2009.

ALSO SEE: Is NSW Planning System Contributing to Woolworths' Problems? 

In total, Australia has seen 60-70 supermarkets open each year in the past 15 years, with a large proportion of these situated in the eastern states.

CBRE Senior Research Manager, Danny Lee, said discount supermarket retailers would lead the roll out of supermarkets across Australia, which is predicted to remain steady in the coming years.

“While increased competition from discount retailers benefits consumers in the form of cost savings, more supermarkets may dilute income streams and reduce market value for stores.”

The rapid increase of new stores brings into question the number of supermarkets that the Australian market can absorb before it reaches saturation point.

“The number of supermarkets relative to the population size of the U.K. and U.S. is a useful comparative benchmark to determine an appropriate level of supermarkets in Australia, given these markets have experienced similar intensity of competition from discount supermarket retailers over the past two decades,” Mr Lee said.

At 16.7 stores per 100,000 people in the UK and 11.7 stores per 100,000 people in the U.S., Australia, at a ratio of 10, appears to be relatively understocked. CBRE Research predicts Australia can accommodate a supply of 40 stores per year over the next five years before reaching the same store provision (in per capita terms) to the U.S. supermarket sector.

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Article originally posted at: https://theurbandeveloper.com/articles/changing-landscapes-australias-supermarkets