Lidl’s Australian plans laid bare

Supermarket giant Lidl won’t be taking on Coles, Woolworths and Aldi in Australia any time soon, an industry expert says, despite rumours the German discounter had been planning an invasion.

Lidl – listed by Deloitte as the world’s fourth-largest retailer, with more than 10,000 stores across Europe – was named late last year in a Colliers report as one of the major international brands likely to set up shop in Australia, after watching Aldi successfully launch into the market.

But 12 months later that plan is all but dead, according to Colliers International’s head of retail Michael Bate, who says Lidl determined that the business case didn’t stack up.

Discount battle: Aldi throws down gauntlet to Coles, Woolies

“They’ve been (to investigate the Australian market), they’re still here, but they’ve decided they won’t runout stores in the Australian market at the moment,” Bate says.

“When they came in the middle of last year, they were very inquisitive on the back of why Aldi was so successful here.”

Why would we bother, when there’s only a slice of 24 million people

Bate says the perfect storm of retail conditions that allowed Aldi to launch so successfully would not be the same for Lidl, who he says decided that there wasn’t enough demand in the Australian market for another major supermarket chain.

“I think Aldi was so successful for one reason and one reason only: there was a gap in the market where Coles and Woolies at the top end were just bashing each other up for the big sites and IGA or Metcash had taken their eye off the ball with what they were doing and they had so many different brands under their umbrella that they weren’t able to get a stranglehold,” he says.

Aldi came to Australia at the perfect time.

“Aldi just snuck in under the radar, if you like, and they’ve done exceptionally well, and it’s a good business with a good percentage.”

“Lidl recently have said that the Australian market is very mature in terms of supermarkes, between Coles, Woolworths, some of their subbrands and Aldi, there’s almost 80% of the market and there’s not a lot of room for us.”

But that’s not to say Lidl won’t be active in the Australian market.

Bate says the German chain has instead turned its attention to exporting Australian products and is focusing on expanding into the US market.

When they came in the middle of last year, they were very inquisitive on the back of why Aldi was so successful here

“What they’ve decided to do here in Australia is work with a lot of Australian suppliers, and they have very successfully sourced a lot of Australian product and a lot of goods that they’re now actually shipping back into Europe and into Asia, where they’re represented, under the Lidl label,” he says.

Bate’s comments suggest that applications to register hundreds of products under the Lidl name in Australia may actually have been part of a plan to ship those products offshore.

“They’ve been able to come in, register the names and are now flogging them back into Europe,” Bate says.

Meanwhile, French supermarket operator Carrefour – ranked as the world’s second-largest retailer – will also steer clear of Australia, Bate says.

“They’ve also been sniffing around our market and have come to the same conclusion, that between Coles and Woolies, why would we bother, when there’s only a slice of 24 million people.”