Aldi Süd confirms plans to enter Italian market

Aldi Süd confirms plans to enter Italian market

According to the German business paper Lebensmittel Zeitung, Aldi Süd has confirmed it will open its discount stores in Italy. There had been rumours, but it has now been confirmed that the southern-based Aldi will head across the Alps through its Austrian subsidiary Hofer.

First the north, then the south

Aldi will open its first Italian stores in the upcoming years, without specifying when. Its intention to enter the Italian market means Aldi will add another country to its list of markets. Right now, Aldi Nord is active in 8 countries, while Aldi Süd also has 8. Both are active in Germany, while Italy would become Aldi Süd's 9th country.

 

Remarkable is that the group would enter Italy through its Austrian subsidiary, Hofer. Aldi will probably focus on Northern Italy and specifically on the larger, more affluent and Western European-oriented cities. Once the base has been solidified, the discounter will probably expand organically to the middle and south of Italy. According to PlanetRetail, Italy is worth some 180 billion euro thanks to its 62 million consumers.

 

It is also a very fragmented food branch: the top 5 of food retailers in Italy barely represent 20 % of the total food market. Small and average-sized retailers still control the majority of local turnover. PlanetRetail believes Italy's relatively high price level makes it an attractive market for Aldi and its discount formula.

 

Lidl has already been in Italy for 23 years

Aldi Süd will encounter two well-known competitors in Italy: Penny, Rewe's discount formula, and Lidl, which has been in Italy since 1992 (!) and which currently has 570 stores locally. Compared to Lidl, Aldi has been very reticent in its international expansion. Lidl has even ventured into small consumer markets like Malta, although it is not very easy to make a discount formula commercially viable in those areas.

 

In April, Italian papers unveiled Lidl's plans to invest 1 billion euro in the next 5 years to solidify and expand its Italian foundation. It now seems Lidl was preparing for the arrival of its competitor Aldi even before it had officially announced its Italian expansion.

 

Hofer or Aldi on storefronts?

Italy won't be the first international market Hofer enters: it has been active in Italy's neighbour, Slovenia, since 2005. Over there, the Hofer brand is the one on storefronts, but it remains to be seen whether it will be similar in the much larger Italian market. Aldi.it has not launched yet, but a who.is check shows that Aldi Süd does own the website. Hofer.it on the other hand does not belong to the subsidiary, but to a flooring company in South Tyrol, Italy.

 

Hofer has to deal with Eurospin, an Italian competitor with 2 % market share in Italy itself, in Slovenia. PlanetRetail feels this may have been part of the reason for Aldi Süd to decide to move to Italy as well. Consumers will now have to wait for its first stores to open in Northern Italy in order to see which name will be used: Aldi or Hofer.

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