Discount retailer believes its time has come

ALDI’s commitment to having a store within easy reach of most Irish consumers in the next 10 years could create the next major revolution in shopping.

If they deliver on their pledge, they will end up with more stores than either Tesco or Dunnes, their main competitors for the nation’s dwindling euros.

Three retailers, Dunnes, SuperValu and Tesco, account for 70% of the €14 billion Irish grocery market. When Superquinn, Aldi and Lidl are included that figure edges towards 90%.

Aldi is currently claiming 4.5% of the market, a share that has been growing slowly but surely. If it presses ahead as outlined last week that should grow considerably. By how much the group refuses to say.

However, there is one important caveat to that assertion — the threatened takeover of Dunnes Stores grocery business by British retail giant, Asda, which is in turn a subsidiary of the giant US giant Wal-Mart.

If Asda buys Dunnes it will hit the ground running and should add significantly to the level of competition in the market — good news for consumers, but not necessarily a positive prospect for key competitors.

Aldi’s head man for Britain and Ireland, Paul Foley, has no doubts about how they will establish a retail presence within easy reach of most shoppers.

He believes the next step in shopping will be a swing back to more convenient stores, with short journeys, and perhaps more frequent shop visits, replacing a lot of the long trips and out of town jaunts undertaken by shoppers at present.

In his view quality of life issues, conservation (driving less) and a functional rather than a consumer driven approach is already changing how people shop and that makes discount stores a more appealing option.

In three years Aldi will have spent €350m, adding 35 new stores bringing its total number here to 94.

Without doubt Aldi will not appeal to all but anecdotal evidence suggests shoppers are becoming more selective and will split their weekly spend, buying where best value is to be had.

The group has also increased customers at the top end of the social spectrum underlining the change that is taking place.

Aldi’s growth reflects efforts by it to appeal to Irish consumers with up to 40% sales sourced in Ireland. Bewley’s supply tea and coffee, flour comes from Odlum’s, crisps from Tayto-owner Largo, meat from Larry Goodman and bottled water from the Gleeson Group, owners of the Tipperary brand.

However, all of these products are carried under Aldi’s range of own-label brands.

Aldi’s formula also allows it to sustain quality.

An average store employs 15 people, far less than others in the trade, while each outlet carries only 900 products, while others have thousands of products on their shelves. In an era of limitless choice, Aldi offers only one tomato ketchup brand, one brand of milk and single brands for virtually everything else.

It saves massively on space, but does not require it to compromise on quality.

Aldi also says the simplicity of the store concept makes is much easier for it to expand.

It is a formula relentlessly pursued and which will apply to the 35 new stores planned over the coming three years.

Above all Foley is confident Aldi has a formula that offers convenience and good value that is starting to gain traction in the Irish market.

With the average weekly shop costing about 30% less at the discounter, the odds look to be in its favour right now.

Cost pressures are such that quality and price have become the main concerns for a growing numbers as the economy slumps, jobs are lost money has to be stretched farther.

Aldi senses its time has come.