THE Aldi-fication of Australia is continuing as Coles launches a new, tough, low price booze seller.
The first store opened in Melbourne’s eastern suburbs this week. It is called Liquor Market and it takes more than a few cues from the discount retail model perfected by Aldi.Firstly, as reported by the Financial Review, the new store is going to offer a reduced range. This is not a giant barn like Dan Murphy’s, selling everything from Chilean red wine to Chinese beer. It will focus on fewer items.And they will be cheap. The shop — in the classic budget colour scheme of yellow and black — has “Low Cost” written on the front in great big letters.
Cheap, but somehow hipster at the same time. Picture: Jason MurphySource:Supplied
The store being used to trial the new model used to be Coles’ First Choice liquor brand. The new Liquor Market will operate a bit differently, including putting stock on the shelves still in its pallets. This is a move Aldi has perfected, saving money on shelf stackers.Aldi’s business model is to cut as many costs as possible — fewer staff, fewer check-outs, fewer products available and fewer opening hours, in order to pass on the savings. Aldi has already forced Coles and Woolworths to cut prices in their supermarket business.But while Aldi is selling award-winning wine for $5 and other wines for as low as $2.89 a bottle, the big two can’t just cut prices. They need to cut costs as well or they will watch profit margins disappear.That’s why Liquor Market makes sense. When I visited the store, some prices were lower than at a LiquorLand — also owned by Coles — located just 50 metres from the Liquor Market.For example, a bottle of Yalumba Pilot Grigio was $1 cheaper and a slab of Sapporo beer was $2 cheaper.
The bottles aren’t taken off the pallets, to save money on shelf stackers. Picture: Jason MurphySource:Supplied
COLES v WOOLWORTHS BAR-ROOM BRAWLColes and Woolies have been slugging it out in Australia for decades. Woolies was king for many years, but recently, Coles have got on top, as Woolworths supermarkets struggled to cope with the success of Coles’ Down Down campaign.Woolworths also owned Masters Hardware, which was a rollicking disaster that cost it billions and distracted key executives. It also owns Big W, which is getting trounced by Kmart.Last year, Wesfarmers posted a profit of $400 million while Woolworths managed a loss of $1.2 billion.Of all the business Woolworths owns, the one doing best is Dan Murphy’s. If this new LiquorMarket competitor starts to do well, Coles might just have figured out a way to undermine Dan Murphy’s, and take away the last good business Woolworths had. Could Woolworths cope with trying to manage yet another struggling business?DOWN DOWN, PRICES ARE DOWN It makes sense for Aussie businesses to cut prices. We keep voting with our feet, going to places like Aldi, and H M for lower-price goods.The head of the RBA has noticed the very low retail inflation and traces it to companies like Aldi. H…