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Aldi opens its battle with Coles and Woolworths in South Australia

Ralph Orlowski/Getty Images

Aldi opened its first four stores in South Australia today as the German discount supermarket chain starts a campaign to grab market share from the big two, Coles and Woolworths.

Queues formed at Parafield Gardens, Hallett Cove, Seaford Heights and Woodcroft before the doors opened.

“After many years of planning and working with the community, we are delighted to officially open for business in South Australia,” says Viktor Jakupec, ALDI Managing Director, South Australia.

Aldi has signed contracts with 12 South Australian produce suppliers and has hired 250 staff.

The supermarket will hire 900 staff as part of a long-term plan to open up to 50 stores across South Australia.

The next stores to open will be at Kilburn, Modbury, Noarlunga, Mount Barker and St Agnes in March. A total of 16 stores are expected to open in the state by the end of 2016.

The German chain, now estimated to have 11% of the Australian market, has a target of 25 new stores on the eastern seaboard this year.

Aldi currently has 400 stores nationally, less than half the 961 at Woolworths but catching Coles at 776.

The discount chain operates its stores more efficiently. According to Deutsche Bank, Aldi employs 24 staff per store in Australia compared to the 110-120 at Woolworths and Coles stores.

And it’s making a deep cut into Australia’s supermarket business. Aldi employs about 9000 people and has doubled its revenue since 2010 to about $6 billion a year.

While the revenue growth is strong, it’s still a long way from that of Coles and Woolworths.

Woolworths, reporting flat results and forecasting the same for the next six months, still had food and liquor sales of $11.064 billion in the first three months of 2016.

It’s forecasting profit to fall 28% to 35% in the first half of 2016 but that still represents between $900 million to $1 billion.

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