IGA shrinking, as expected
We keep repeating our prediction of the gradual demise of IGA supermarkets as a consequence of Aldi and Costco expanding their network. According to Citi Research, in 2012 Aldi’s size was around 30% of Metcash’s IGA. Five years later, Aldi has grown to 60% of IGA, in line with our expectations. At this rate their market share will be roughly the same around 2020. The question arises at what point does IGA’s supermarket business model begins to break. Note that in the process Coles and Woolworth will also suffer.