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ALDI opened its Corner Store format in the Sydney suburb of Newtown last week.

The retailer’s director of customer interactions,Adrian Christie,said the different store format was key to Aldi catering to city shoppers.

“We want to bring that[affordable offer] to someone who may have been used to paying premium prices in inner-city locations – in some of those locations,the costs are more significant than outer suburbs,” he said.

“We want to bring that value to customers – it doesn’t matter where they live.”

Aldi first trialled the smaller store format in Sydney in 2021,and now has seven sites – three in Melbourne and four in Sydney. Its focus on fresh-baked bread and fancy cheese may elicit a more boutique supermarket feel than the typical suburban Aldi,but the value pitch to shoppers is still the same.

“When you get to the till,you realise it’s still Aldi prices,” Christie said.

The German grocery giant entered the Australian market in 2001,andsurging grocery costs andrising interest rates have boosted the relevance of the discount retailer’s low-cost pitch over the past year. Food inflation was tracking at 7.9 per cent in the 12 months to May.

The Australian grocery market is dominated by Woolworths,which holds a market share of just over 37 per cent,and Coles,which holds close to 27 per cent of the market,according to data platform Statista. Aldi is the third-largest player in the country,holding around 9.5 per cent of the market,while IGA operator Metcash commands close to 7 per cent.

Coles and Woolworths have also been facing price inflation across their businesses over the past 12 months,with both brands acknowledging surging demand for theirprivate label products as consumers try to make their dollars stretch further.

Analysis from UBS suggests that food inflation based on Coles and Woolworths online prices averaged 8.9 per cent in May.

Retail analysts have tipped Aldi to benefit over the next year as consumers rein in their spending.

Analysts at Jarden said in a note last month that based on industry analysis,Aldi’s sales growth will be in the teens over the next 12 months,while the broader grocery market grows between 5 and 8 per cent.

“The rising focus on value,increases in cross-shopping and general focus on value are seeing Aldi growth re-accelerate,with share of footfall up steadily,” its analysts said in a note to clients in May.

Christie said many shoppers were coming to Aldi for the first time as they contend with rising costs. He said that while consumers often headed in-store for one particular product,they tended to expand their baskets over time.

“They might come in for meat,and it might take them a month,or two months,but they start exploring different parts of the range.”

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