March 9, 2017

Aldi gets serious about Italy

A for Aldi (photo: Grafvision/Fotolia)
P is for pasta, A is for Aldi
Mamma mia! Fruitbook Magazine has actually flown over Aldi's first distribution centre in Italy and shot some photos. The site in Oppeano, 20km from the centre of Verona, is still under construction. But, as the picture taken in mid-February below shows, the German discount giant is well on the way to setting up shop in Venetia.

One real estate developer tells us that Aldi is already searching for another DC of around 60,000m² to the south of Milan. Luigi Rubinelli, managing editor of RetailWatch, believes this could be in the vicinity of Piacenza. He also says that Aldi has just signed the lease on a first store in Merano.

True to form, Hofer, Aldi South's Austrian subsidiary responsible for group expansion in bella Italia, remains tight-lipped. This gives free rein to speculation on how big the company wants to become south of the Alps. So what have we been able to piece together for our readers so far?

The local press claims that the site in Oppeano includes an adjacent store. This is unusual, although not entirely unknown here in Germany. But claims that the plot totals 375,000m² have caused astonishment. Perhaps we lack imagination, but this hardly seems credible.

Aldi's first DC in Oppeano (photo: Fruitbook Magazine)
Aldi's first distribution centre in Oppeano
We therefore showed the photo to a number of logistics experts and real estate developers who estimate the size of the DC at a more plausible 56,000m². They believe that as much as 40 per cent of the observable terrain could be for trucks to manoeuvre and park. They also speculate that there is space for a further module of around 60,000m² which could be utilised in a later phase as the business ramps up.

The cost for Aldi, touted as low as €1.3m in parts of the Italian press, looks exceedingly low. The specialists we consulted pointed out that a normal grade A, ten-metre-high warehouse with a surface weight capacity of 5 tons/m² and one ramp door per 800m² to 1,000m² of storage space would cost €350 to €400/m² to build, excluding the purchase price of the land.

The Italian media are currently working on the basis that Aldi will open 20 outlets by the end of this year in Trento, Bolzano, Verona, Rovigo and Treviso. This sounds feasible if the discounter starts building by summer.

A glance at the website of Aldi S.r.l. would indicate far more ambitious plans for Italy than just the north-east of the country, i.e., the regions Trentino-South Tyrol, Friuli-Venezia Giulia and Venetia. Aldi is clearly also looking for sites able to house stores with at least 1,000m² of selling space in the north-west (Valle d'Aosta, Piedmont and Liguria) as well as in Lombardy, Emilia-Romagna and Tuscany.

Aldi's Italian HQ in Verona (photo: Fruitbook Magazine)
Aldi's Italian HQ in Verona where the local press claim future staff are being trained "on a continuous basis"
When Aldi finally starts on the peninsula it will not only have to face local competitors, but also two well-established German discount rivals. Schwarz Group subsidiary Lidl Italia has opened around 570 outlets since 1992 and posted gross sales last year of around €3.9bn. Rewe Group subsidiary Penny Market has also built up a network of around 340 stores, and Rubinelli estimates that their sales grew by around 4 per cent last year.

The huge game of catch-up that Aldi will be obliged to play in Italy has led to press speculation that it might decide to kick-start entry via an acquisition. This is not really in Aldi's DNA, but it has made the occasional acquisition in the past, so the eventuality cannot be excluded entirely.

The takeover candidates touted in the local media include supermarket operator Migross (no connection with Swiss retail giant Migros), local discounters TuoDì, Dpiù, MD and iN's, as well as Penny Market.

Italian ice cream seller (photo: Scusi/Fotolia)
We promise an Italian ice cream for the first reader who gets Hofer to talk with us
The Italian companies could not be reached for comment before we went to press, but Rewe was adamant that Penny Italia is not for sale: "We are satisfied with the way Penny is progressing in Italy and will continue to strengthen its good position via appropriate investment."

Whatever Aldi's plans might be, the long-delayed entry of Germany's most profitable discounter into Italy will shake up retailing throughout the country. We will obviously do our very best to keep you informed about their progress. Doubtless much will be speculation, but, who knows, maybe one day Aldi will tire of our guessing games and give us a call. We believe they have our number...


Related article in German: "Aldi steht vor dem Markteintritt in Norditalien" by Mike Dawson on page 10 of Lebensmittel Zeitung, no. 10, 10.03.2017


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