Shoppers in Ballarat’s west could soon be spoiled for choice as major supermarkets compete for market share in the city’s newest neighbourhoods.
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But this proliferation – with a sixteenth supermarket opening in Ballarat this week – could come at a cost to supermarket giants Coles and Woolworths who risk saturating the marketplace, a business expert has said.
The opening of Aldi’s fourth store in Ballarat comes on the eve of Woolworth’s full year report, in which the company has been forecast to report losses of about $1 billion.
Woolworths is expected to open its sixth store in Ballarat at Delacombe in late 2017.
The ailing supermarket giant will also close its Stocklands Wendouree store for renovations next year as part of the centre’s expansion, with construction tipped to begin mid next year.
“When there’s that degree of saturation there’s more going on then them trying to make money, it’s more about them creating a difficult, competitive marketplace for each other,” University of New England managing and marketing leader Professor John Rice said.
“The stores may be individually loss making but what they will do is chase out competitors.
“In their (Woolworths) quarterly results they’ve flagged the closure of stores and I think Woolworths are on the retreat in many markets and I think Aldi going aggressively into the regional markets may be to push back the dominance of Woolworths and Coles.”
Professor Rice said Aldi, which has lower running costs and less floor space than its main competitors, had less risk of canibalising itself.
Woolworths flagged earlier this year that it would close 27 under performing stores across the country, and will also sell its two home hardware businesses.
“I think what Woolworths has moved away from is a strategy for growth for growth’s sake, they notoriously would open stores literally across the road from their major competitor Coles even if there was a concern about the viability for that particular store,” Queensland University of Technology Business School’s Dr Gary Mortimer said.
However “green field sites” – like the site at Lucas where houses are still under construction – remain popular.
“Much of this expansion in Ballarat would be around picking and securing prime retail positions before the competitor gets into the market,” he said.