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Aldi dashes hopes of imminent New Zealand launch

(Source: Bigstock)

For 24 hours, New Zealanders were teased with the prospect of German discount retailer Aldi expanding into the nation’s duopoly-run grocery market – only for such hopes to be dashed on Wednesday. 

The prospect was raised by acting Prime Minister Grant Robertson who told Radio New Zealand that Aldi was “one of the players” interested in the New Zealand market. Pressed further he said: “I am not going to announce things to people today.”

However, on Wednesday an Aldi spokesperson said the company has “no current plans to expand into New Zealand”.

The key word in that statement was “current” and Aldi’s plans should be considered in the context of the current market conditions which make it almost impossible for any new supermarket operator to set up shop – aside, of course, for Costco, which operates on a completely different business model to that of traditional supermarkets. 

There have been rumours of Aldi entering New Zealand for more than 20 years, back when this writer was editing a weekly food industry newsletter in Auckland. 

By 2010, Aldi had registered more than 100 trademarks with the Intellectual Property Office and had locked in the website domain name (a URL currently directed to its Australian website). 

The majority of Aldi’s products are private label and its stores range significantly fewer items than a typical New World or Countdown store. Inside Retail understands a small number of its Australian products are sourced from New Zealand, manufactured under contract. Some are sold in Aldi’s Chinese stores, along with Australian-sourced goods.

Aldi launched in Sydney in 2001 and has subsequently built a network of almost 600 stores in six states and territories. 

If Aldi does open in New Zealand, it will face a challenge finding sites in shopping malls that traditionally have exclusivity clauses preventing rivals of existing supermarket tenants from leasing space under the same roof – a scenario quite different to that in Australia, where Aldi is flourishing.   

This practice – and another called land banking, in which one of the two major operators in New Zealand, Woolworths and Foodstuffs, buy land and sit on it in order to prevent the other from developing it – may be changed when the government develops a policy having absorbed the Commerce Commission’s recent inquiry into the grocery industry. That inquiry also heavily criticised the domination of the nation’s wholesale grocery sector by Woolworths and Foodstuffs. 

Robertson may well have been caught on the hop when he named Aldi as a grocer interested in moving into New Zealand as it is highly conceivable that government officials would have met with Aldi management when considering the advice of the Commerce Commission’s inquiry – or the commission itself. Or he may be quite accurately referring to the company’s long-term pattern of securing brand rights here.

Whichever way, he was right: Aldi is interested in entering New Zealand and has been for more than 20 years. And when market conditions are ripe, it will make the leap across the Tasman. The next move is up to New Zealand’s government. It has to find a way to create a more level playing field that makes it easier for newcomers to find store sites and obtain products from an independent wholesaler not owned by an existing rival. 

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