Retail giants snub Tasmania: Why Aldi, Costco resist expansion

Tasmanians have long been yearning for the arrival of Aldi and Costco, two retail powerhouses known for their competitive pricing and diverse offerings.

Yet, despite the island state’s growing demand, both companies remain conspicuously absent, leaving locals to question why they are being overlooked in the retail landscape.

Aldi, the German-owned supermarket chain, has made its mark across Australia since 2001, boasting over 590 stores nationwide.

Promising “Australia’s lowest prices”, Aldi has become a staple for budget-conscious shoppers.

However, Tasmania remains one of the few jurisdictions, alongside the Northern Territory, where Aldi has yet to establish a presence.

The Greens have now stepped forward with a $30 million plan to entice Aldi to Tasmania, arguing that the supermarket’s entry would drive down grocery prices and invigorate the local economy.

This initiative reflects a strategic push to provide Tasmanians with more affordable shopping options and stimulate job creation.

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Shannon Hendry shopping with daughters Cleo, 3, and Charlie, 4, at Costco Warehouse in Bundamba. Picture: Tara Croser.

Meanwhile, Costco, renowned for its bulk-buying model and expansive warehouse stores, also remains absent from Tasmania.

Ray White Group head of research Vanessa Rader said the lack of both Aldi and Costco had left Tasmanians with limited choices and potentially higher grocery bills compared to their mainland counterparts.

However, she adds the reason for their absence was perhaps easy to explain.

“It all comes down to population and scale…they just couldn’t make it work there because it does need the additional kind of industry or what not,” she said.

“With Costco, I don’t think (the Tasmanian) market would sustain any more than one store, so that, plus the additional requirement for distribution…makes it not a viable situation.

“Aldi is a little bit different because you already have your Woolies and Coles, which means the population just isn’t there to compete with what’s already there

“I think it’s a market that’s already at capacity in terms of what their requirement for supermarkets is. So I think Aldi is thinking that the market is quite small…so unless there’s a change in that population landscape, things aren’t going to change and then you also have geographical difficulties in getting stuff there.”

Greens announce $30m plan to entice Aldi to Tasmania

While logistical concerns, market size, and population density may be factors, the persistent demand from locals suggests a ripe opportunity for expansion.

As the situation unfolds, Tasmanians are left wondering if and when these retail powerhouses will recognise the untapped potential of the island state.

The Greens’ $30 million proposal stands as a significant gesture towards bridging this retail gap, but whether it will be enough to sway Aldi and Costco remains uncertain.

Tasmanian Greens Senator Nick McKim, who is the party’s economic justice spokesman, announced the plan in April, saying bringing Aldi to Tasmania would help ease cost-of-living pressures in the state.

“Coles and Woolworths have had it too good for too long, and Tasmanians are paying the price,” he said.

“A lack of competition means shoppers here are paying at least $15 more on a basket of essential groceries compared to Aldi, which adds up to hundreds of dollars a year.”

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Customers waiting outside Bargara Aldi.

Senator McKim said the Greens would launch a $2m supermarket competition review that would determine the barriers preventing discount supermarkets such as Aldi from establishing themselves on the Apple Isle.

The party would then provide the state government with up to $28m to support the entry of new competitors in the supermarket sector, which could involve subsidising distribution centres, boosting supply chains, and making government land available to supermarket retailers on a competitive basis.

Senator launches petition to being Aldi to Tasmania

Tasmanian independent senator Tammy Tyrrell has also pushed for Aldi to head south to the island state, launching a petition that has attracted thousands of signatures.

“They say imitation is the best form of flattery (and) I’m glad the Greens are finally on board my campaign to bring Aldi to Tassie,” she said.

“The more the merrier – if this puts more pressure on Aldi to make the leap across Bass Strait, I’m happy with that.

“The (Australian Competition and Consumer Commission) says bringing Aldi to town saves people an average of $890 a year. That could be the difference for someone keeping their heater on in winter or not.”

Senator Tammy Tyrrell questions Woolworths CEO, Bradford Banducci at the Senate Select Committee on Supermarket Prices at Parliament House in Canberra last year. Picture: NCA NewsWire / Martin Ollman

Tasmanian MP Andrew Jenner from the Jacqui Lambie Network is also calling on the state government to invest $1 million in a study to explore the possibility of bringing a Costco or similar low-cost supermarket chain to the island state.

“Research from consumer group Choice has found that the average cost of groceries in Tasmania is 25 per cent higher than on the mainland, despite Tasmanian wages being an average of 10 per cent lower,” Jenner said.

“The report stated that the lack of ALDI, or equivalent low-cost supermarkets in Tasmania is directly contributing to the higher-than-average grocery prices.

“Bringing Costco, or a Costco equivalent, would directly help alleviate the cost-of-living pressures in a fundamental way.”

Aldi has ‘no current plan’ to come to Tasmania, CEO says

A report published last year by consumer group CHOICE found that Aldi was the most affordable supermarket chain in the country, with the total price of an average basket of groceries being $50.79.

While Aldi has almost 600 stores across Australia, Tasmania is the only state without one.

Even Geelong, which is a similar size to Hobart, is home to Aldi.

Speaking at a Senate inquiry in April last year, Aldi CEO Anna McGrath said the chain had “no current plan” to open a store in Tasmania, citing supply chain “complexities”.

“That’s not to say that we don’t continuously review where we may expand in the future,” she said.

Anna McGrath, ALDI Stores Australia Chief Executive Officer appears before a Senate Select Committee on Supermarket Prices at Parliament House in Canberra. Picture: NCA NewsWire / Martin Ollman

When asked why Aldi was expanding to other smaller regions but not Hobart, Ms McGrath replied it “goes back to us having a very different business model”.

“For us, the way that we’re able to continue to invest in price is to keep our operating costs as low as possible and having the lowest operating costs in the sector,” she said.

“That means when we’re identifying where to expand, we do need to consider the additional costs and complexities that are involved.”

The unfolding situation highlights a pressing issue: will Tasmania continue to be sidelined in the retail landscape, or will Aldi and Costco finally answer the call of its residents? The outcome could reshape the state’s retail environment and consumer experience for years to come.