Nothing surprising about the rise of Aldi

MAY 27, 2015

Aldi provides consumers with a rare opportunity to vent against the big chains. Source: Supplied
OPINION
ALDI’S rise happened naturally.
The major supermarket chains seem genuinely surprised that Aldi is competition that is to be taken seriously. It’s perplexing that they did not identify the rise of Aldi and its popularity among consumers earlier. The question is whether, having decided to actively counter the Aldi challenge, Coles and Woolworths understand the underlying drivers behind Aldi’s popularity. It goes well beyond paying less without compromising quality.
Aldi’s rise happened naturally. Until recently the company did not even bother advertising on Australian televisions. Rather they allowed consumers to discover the stores for themselves and let word-of-mouth (and word-of-mouse) do its thing. Their patience paid off. They were the right offer for the right time.
Curious, Australian shoppers explored Aldi offerings and experimented category by category, and they liked what they saw. The whole Aldi experience is a positive one. Too positive you might say. The brand might as well sprout wings and a halo.
Consumers believe that compared with the other supermarket chains Aldi is significantly cheaper in each and every category. What they didn’t know was whether the products were any good. Did they compare on quality? So they experimented with Aldi’s products one by one and assessed their own, and crucially their family member’s reactions to them.
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For the most part they were impressed. Not in every category but in many. They compared the ingredient lists on the back of packs and saw no differences from their favourite brands. Many assume Aldi products are manufactured by one of the leading brands and merely packaged differently. Or they are sourced from Europe, which suggests quality by association. Savvy consumers read the manufacturers addresses on packs and recognised them to be the same as some of the leading brands.
So satisfied have consumers been with so many of Aldi’s products that a few years ago something started shifted in the consumer mindset. It happened around the time that Aldi were permitted to set up shop in the same shopping centre as the major supermarkets making it convenient for consumers to duck into both on the one excursion. Aldi was transformed from a novelty destination and afterthought. This was solidified to me when I started hearing talk from consumers about doing the major weekly shop at Aldi and supplementing this at Coles or Woolworths for the things they couldn’t find (or didn’t like) at Aldi.
Consumer affection for the brand goes well beyond price and quality. Australians rave about Aldi’s many other qualities like their commitment to Australian produce, the predictable layout of stores, the shortcuts having less product choice affords them and the surprising and seemingly random products like inflatable pools or vacuum cleaners (which are enticing due to bargain prices and make the shopping experience much more interesting). Consumers have even noted that Aldi’s check-out staff are permitted to sit on stools while major supermarkets make their staff stand all day.
Australians’ love of Aldi is as much about what it isn’t as what it is. It provides consumers with a rare opportunity to vent against the big chains. Asked about Aldi and Australians actually know very little about the company. The actual size and scale of Aldi is something most people in Australia are simply not aware of.
Ultimately, they don’t want to know. Seeing Aldi as the underdog allows consumers to feel like they are beating the system. That they are winning against a duopoly which they believe has too much power and is not on the side of consumers. This emotional connection goes beyond mere dollar and cents savings.
When consumers recently vented against Woolworths misguided Anzac Day promotional tribute they were feeling riled already. It was an opportunity to express their long standing feeling of having the wool pulled over their eyes with spin and marketing. Media reports about suppliers, especially farmers, being treated unfairly resonate powerfully with consumers.
The former head of Tesco, Sir Terry Leahy recently told the Australian Financial Review that perhaps Woolworths needs to “favour the customer [over shareholders] to rebuild and reconnect with customers.” This is what the Australian consumers have been shouting loudly and clearly for some time now. The big supermarket chains just weren’t listening. Until now.
Neer Korn is a social, market and consumer researcher
This article originally appeared on The Korn Group blog.