Aldi is to overhaul all of its Australian stores by 2020 as it revamps its fresh food offer to compete with Coles and Woolworths.

The German discounter has stated it will reinvest all Australian profits, with the focus on store refurbishments and extensions, new store openings and centralised produce buying.

The updated store format, which has been trialled this year, will roll out to all existing and new stores by 2020. The new format features clearer signage, redesigned shelving, expanded wooden produce bays, LED lighting and extended chillers.

Planet Retail reported in September that Aldi was moving to a new centralised buying model for fruit and vegetables.

It is shifting away from spot price contracts to longer-term deals and relationships with suppliers. All purchasing will become centralised into one buying department with national buying responsibility – currently there can be as many as six separate purchasing locations for a fresh product in order to service the Australian store estate.

The new approach will take between six and 12 months to implement and will move Aldi closer to the purchasing model maintained by Woolworths and Coles.

“The new centralised fruit and vegetable purchasing model, which will roll out by mid-2017, will further improve our strategic relationships with suppliers to focus on long-term, flexible contracts that suit the grower, product, season and conditions,” an Aldi spokesperson said.

Building on successful expansion

The Australian has also reported that Aldi had opened more than 100 new stores and three distribution centres over the past two years.

Aldi said its expansion into South Australia and Western Australia had been “extremely successful” in attracting new customers with Aldi stating that: “To date, our expansion has captured 3.2% market share in South Australia and 2.3% in Western Australia, with increased competition benefiting consumers and suppliers”.

Aldi Australia chief executive Tom Daunt expects the company’s market share to grow from just under 10% currently to 15% within a few years.

The retailer also revealed sales of AUD5.8bn (£3.56bn) in the calendar year 2014, an increase of nearly AUD1bn (£614.8m) on the previous year, with pre-tax earnings of AUSD238.5m (£146.6m).

David Gordon is a research director at Planet Retail