The Australian newspaper is reporting that German discount supermarket chain Aldi is ramping up its expansion plans into Australia for the year ahead.
The German disruptor has long planned a move into South and Western Australia in FY16, but the newspaper also suggests it plans "to open up an additional 40 stores across the eastern seaboard over the next year".
The reported plan to add a total of 80 new stores out to 2016 would boost total numbers by around 20% if executed and suggests the dominance of Woolworths Limited (ASX: WOW) and Coles operated by Wesfarmers Ltd (ASX: WES) may be under an increasing threat in 2016.
The plans were leaked via a letter Aldi reportedly wrote to its suppliers advising them to prepare for a 20% surge in demand for their goods. Listed grocery suppliers to Aldi and the other supermarket majors include salmon farmer Tassal Group Limited (ASX: TGR) and newly-listed fruit and veg merchant Costa Group Holdings Ltd (ASX: CGC).
It's no surprise Aldi fancies Australia as a market ripe for disruption given the high margins enjoyed by the effective duopoly of Woolworths and Coles.
Woolworths recently posted declining same-store sales for its supermarket business for the final quarter of FY15, with an outlook for falling margins in an attempt to boost sales. The stock is off 30% over the past year and Aldi's plans to steal market share mean Woolworths' new management team will have to execute its turnaround strategy well to halt the decline.
