Woolworths, Coles or ALDI: where should a challenger brand start?

Start with the market shape, because it explains everything else. The ACCC's Supermarkets Inquiry final report, published in March 2025, estimates Woolworths holds 38 percent of national supermarket grocery sales, Coles 29 percent, ALDI 9 percent and Metcash, as a proxy for the independents it supplies, 7 percent. The same report describes an oligopolistic market with significant barriers to entry at scale. For a challenger that concentration cuts both ways: two buyers control most of the shelf, and winning either one changes your business.

The two majors are not the same size. Woolworths ended F25 with 1,117 Australian Food stores, and the segment recorded sales of $51,452 million for the 52 weeks to 29 June 2025, per Woolworths Group's annual report and full year results. Coles finished the same period with 860 supermarkets and $39,987 million in supermarket sales revenue, per its 2025 full year results. ALDI is a different animal again: it opened its 600th Australian store in May 2025 and says 88 percent of the population now lives within 20 kilometres of an ALDI, per its announcement at the time.

Here is the honest limit on the store counts: bigger is not automatically better for you. A national ranging means filling every one of those stores from the first purchase order, which typically lands one to six months after a win, and you fund production across that gap. The right question is not which retailer is biggest. It is which volumes your supply chain and cash flow can actually carry.

A standard Coles or Woolworths supermarket stocks 15,000 to 25,000 products across 1,500 to 4,000 square metres, while a typical ALDI runs about 1,000 square metres and roughly 1,800 to 2,000 products, per the ACCC's 2024 figures. The majors run broad ranges with room for challengers. ALDI curates a tight one where every line has to earn a high volume slot.

The private label split matters more than the store counts. As of the end of 2023, about 20 percent of the products at each of Coles and Woolworths were private label, per the ACCC, which means roughly 80 percent of the shelf is branded. At ALDI the ratio inverts: 80 percent of products were private label, all of them pseudo brands, labels ALDI owns that present like independent brands. Twenty percent of a range that small leaves only a few hundred branded slots in the entire store, which is why a branded challenger's natural first home is usually a major.

There is a margin logic underneath this. The ACCC found Coles and Woolworths earned higher average product margins on branded products than private label over the five years to FY2023-24, almost 10 percentage points higher at Woolworths and about 3 at Coles, while ALDI made similar margins on both and its overall average product margins were lower. Branded products earn the majors more, which is part of why they keep ranging challengers at all. But the majors' own labels are growing hard: Exclusive to Coles sales reached $13.7 billion in FY25 with 970 new products launched, per Coles' full year results, and Woolworths reported own and exclusive brand sales grew 5.0 percent in F25, outperforming branded growth, per its results announcement. Your shelf competitor is increasingly the retailer itself.

At Coles and Woolworths, ranging decisions happen at range reviews the retailer initiates on a set calendar. Depending on the category the window comes around roughly every six months, and for packaged grocery specifically the ACCC found reviews are often every twelve months with possibly a minor review in between. Either way the window is fixed: miss it and you wait. Coles routes goods-for-resale suppliers through its Supplier Central portal, per its supplier page, and if a buyer is interested the invitation to present can arrive with about two weeks' notice.

ALDI told the ACCC its process differs from the rest of the market. It reviews its range on an ongoing basis through the year, timed to contract start and end dates, and described its category review as closer to a strategy setting process than a Coles or Woolworths range review. The front door is a single online application covering fresh produce, core range groceries and Special Buys, with a stated 14-day response time, per ALDI's supplier page, and ALDI says it aims for long-term relationships with high-volume, timely orders. That phrase is the brief: it is telling you what kind of supplier it wants.

Fresh produce is its own world at all three. In many fresh categories, actual prices and volumes are set through weekly tenders in the week before supply, per the ACCC, with ALDI also running a seasonal tender that gives prospective suppliers indicative regional volumes. If that is your category, you are planning for weekly price risk rather than a ranged shelf position, and the review calendars above apply loosely at best.

The arithmetic is the same shape at all three, but the values change. Trade spend, the rebates and promotional funding you pay the retailer, commonly runs 10 to 25 percent of gross sales in Australian FMCG. Retailer margins run roughly 25 to 45 percent by category. Chargebacks for non-compliant deliveries commonly run 1 to 5 percent of invoice value. Build a separate pricing waterfall for each retailer you are considering, at that retailer's likely volumes, and see which one still leaves a positive number per unit at the bottom.

ALDI's economics reward a specific kind of supplier. Its overall average product margins are lower than the majors' and it earns similar margins on branded and private label, per the ACCC, and its whole model is fewer lines at higher volume per line. It also plays a long game: the ACCC noted it took ALDI roughly 20 years to reach about 10 percent national share of supply, and ALDI told the inquiry that adding stores is the most expensive way to get growth. Supplying it is a volume manufacturing commitment more than a brand building channel, and for a challenger still proving demand, that commitment usually comes later, not first.

Then there is the cash. The first purchase order typically lands one to six months after a ranging win, EDI builds take months, not weeks, and you carry production, packaging and compliance costs across that gap before a dollar comes back. In FY25, 871 Australian retail businesses hit insolvency for the first time, and a meaningful share of that is cash flow timing rather than demand. The right first retailer is often the one whose opening volumes you can fund, which is not always the one with the most stores.

There is no universal answer, but there is a defensible default. Prove rate of sale somewhere smaller first, independents, pharmacy or your own DTC channel, because real numbers from a small channel beat projections from none. Then pitch the major where your category case is strongest, not the one with the bigger logo: the buyer you can give the best answer to is worth more than the buyer with the most stores. Treat the second major as a follow-on once your supply record exists, and treat ALDI as a deliberate volume decision you model on its own terms, not a consolation prize.

Concede the obvious: nobody can promise you a ranging at any of the three. The buyer decides, every time, and a partner who guarantees shelf space is describing their marketing. Built for Retail has ranged brands into Chemist Warehouse, Woolworths, Coles and Priceline as the agent, and past rangings never promise future ones. If you want the which-retailer-first question answered with your numbers rather than instinct, that is what the Retail-Readiness Sprint is for: a fixed fee of $15,000 for a single retailer scope or $25,000 across multiple retailers, about four weeks, covering your trade spend model, pricing waterfall, review calendar and compliance gap list. You keep the model either way, and sometimes its answer is not yet. The Sprint is indicative and does not guarantee ranging.