Why do Australians love Aldi? The secrets to the supermarket’s phenomenal success

NOVEMBER 22, 2014
News.com.au

A rush of curious customers hunt down bargains at a new Aldi.
A rush of curious customers hunt down bargains at a new Aldi. Source: News Corp Australia
IT’S the story of an unlikely underdog that rose from nothing to take on two giants.
In a country where Coles and Woolworths have dominated the retail market and our lives for years, a German discount supermarket is now forcing them into a corner.
These are the secrets behind Aldi’s phenomenal success in Australia.

Many shoppers see Aldi as a refreshing alternative to Coles and Woolworths.
Many shoppers see Aldi as a refreshing alternative to Coles and Woolworths. Source: AFP
THE LITTLE GUY
Since it opened in 2001, the retailer has grown like wildfire, and it now sits just behind the big two, having reached “critical mass” — the holy grail of 350 stores and$A4.03 billion in sales.
Shoppers have embraced Aldi’s low prices and alternative brands, and even better, its popularity is driving down prices elsewhere too.
Brian Walker, an expert from Retail Doctor, believes the core of the supermarket’s appeal lies in our affection for a have-a-go hero.
“I think we have empathy for the challenger,” he told news.com.au.
Incredibly, as much as 80 cents of every dollar spent in Australia goes to a Coles- or Woolworths-owned business.
But a cultural shift is taking place, as we grow tired of traditional shopping experiences and more accepting of bargain-hunting.
Even Aldi cites the Woolies-Coles duopoly as part of the reason for the German chain’s popularity in Australia.
“There are more players and greater competition in other markets,” a spokesperson told news.com.au.
“In Britain for example, the top five chains share in 70 per cent of total supermarket sales. Comparatively, Woolworths and Coles have a similar market share here in Australia.”

Exceptional value is the key to the German retailer’s success.
Exceptional value is the key to the German retailer’s success. Source: News Corp Australia

SIMPLE SAVINGS
Aldi is openly value-focused, an attitude that Australians have embraced since the global financial crisis.
The growth of online shopping and price comparison sites have also made it much harder for supermarkets to get away with ripping us off.
“It’s no coincidence, when you look at the growth of online and transparency in prices,” Mr Walker said.
“It’s top-down from Woolies and Coles, but Aldi is always upfront.”
A Choice supermarket survey in November 2009 found Aldi was 25 per cent cheaper than its nearest priced competitor, and the ACCC Grocery Inquiry in 2008 showed that major supermarket chains reduce their prices in locations where Aldi is present.

Aldi offers shoppers a quality-tested own-brand range.
Aldi offers shoppers a quality-tested own-brand range. Source: News Corp Australia
ALTERNATIVE PRODUCTS
Some of Aldi’s exclusive products have caused a sensation with shoppers. The store has become famous for its Mamia range of nappies, which have consistency remained one of the top two brands sold in Australia, according to Nielsen.
The retailer is also now known for ski gear, with customers seeking it out every Easter, when the popular range now returns like clockwork.
The chain sells a far more limited selection of items than most supermarkets, with just 1350 core range products.
Many of them are adaptations of popular existing brands, benchmarked against the market leader to ensure quality.
So shoppers looking for cheap alternatives to expensive brands are learning they can get specific items at a discount price at Aldi.
“They’re narrow but deep,” Mr Walker said.
“You’re not going to see hundreds of toothpastes, but three or four, which they sell over and over, rather than a thinner spread.”
Shoppers are heading for Aldi specifically for products they know are as good as their regular brands.
ELEMENT OF SURPRISE
In addition to its permanent range, Aldi has weekly “Special Buys”, which appear every Wednesday and Saturday.
These exclusive, limited offers add excitement for the shopper, like a lucky dip or a bet on the horses.
Clever choices can really resonate with shoppers, with Aldi recently acing it by offering table tennis sets for $89.
And it can offer great savings, having perfected its bargain-hunting strategies worldwide.
“Buyers are scouring oversupply from the inventories of suppliers,” Mr Walker said.
Suppliers might approach Aldi with news of 10,000 bottles of washing-up liquid at a low price, for example.
Mr Walker calls this “opportunistic buying”, and we are leaping on the deals.

Aldi carefully picks its locations, adds car parks and keeps stores simple.
Aldi carefully picks its locations, adds car parks and keeps stores simple. Source: Supplied
STREAMLINED EXPERIENCE
Aldi knows has refined its business model over the years to help keep those prices extremely low.
The minimal product range, functional store design and lack of short-term promotions besides the “Special Buy” means it is the no-frills airline of supermarkets.
An Aldi spokesperson said: “We’ve eliminated all costly extras and overheads by selecting only the best products in each category, displaying products in reusable crates and not giving out plastic bags, which encourages customers to recycle.
“We concentrate on selling our select range of exclusive brands rather than spending money on customer loyalty programs or expensive point of sale displays.”
Aldi picks prime geographic locations, to ensure it is easily accessible. Stores often appear close to the other leading supermarkets, but outside of the busy shopping centres, and have car parks.
WORD OF MOUTH
Aldi has benefited from its positive image with Australian shoppers, especially when it is held up in contrast to the ubiquitous Coles and Woolworths experience.
“Customers become advocates, enablers, communicators,” Mr Walker said.
It is shared stories about Aldi’s hero lines that are helping its stellar growth, and that in turn benefits the supermarket’s straightforward, “below the line” branding.
Its Facebook page has more than 200,000 likes, while Coles and Woolies sit at around 700,000, and Aldi’s page is filled with users asking when a store will open near them.
The chain is scientific in its research and efficient in adapting according to what customers want.
“Our business model allows both our everyday range and special buys to be extremely dynamic, regularly adapting to match the changing tastes and preferences of customers,” according to an Alid spokesperson.
Aldi only has 360 stores but has another 120 planned for the coming years, in a $700m expansion in Western Australia and South Australia, where affordability is particularly prized.

The discount store has expanded its gourmet ranges for foodie Australians.
The discount store has expanded its gourmet ranges for foodie Australians. Source: Supplied
AUSTRALIAN EFFECT
Aldi has actively changed and expanded its range to meet the demands of the Australian consumer.
It has honed in on Australians’ foodie tendencies and offers affordable gourmet as well as budget products.
As well as its popular baby products, it is becoming known for offering Expressi coffee machines and 20 different capsules for caffeine-loving Australians.
Its fresh beef, poultry and dairy have also won countless awards, with its Westacre and Cowbell cheese winning Canstar’s Most Satisfied Customers Award.
Some retain a snobbery about Aldi’s little-known overseas brands and dislike its knock-off versions of well-loved products such as Weetbix.
Others criticise the freshness of its fruit and vegetables, saying they go off faster than those from other stores.
But even for those who don’t shop there (or won’t admit to it), Aldi is driving vigorous price competition — and that’s a good thing for everyone.
ALDI AUSTRALIA STATS
Store staff 15-20 per store
Total store count 361
Store openings in 2014 22 to date
Employees Approximately 8000
Average store size 1000 sqm
Product and Supermarket Award Titles 200 +
Core range products 1350
Eastern Seaboard Market Share 10.3 per cent
Expected employment opportunities in SA and WA 2000
Stores to open across the eastern seaboard by 2016 400+
No artificial colours storewide