Aldi eyes huge move to rival Coles and Woolworths
A major pivot by Aldi would alter Australia's retail landscape.
Aldi is considering giving customers the option of shopping online, which would allow the supermarket chain to compete more closely with Woolworths and Coles. The major challenge to this idea, however, is keeping prices lower than Aldi's main rivals.
The retailer, which had tested the market last year by offering some Special Buys items online, clarified in a statement to Yahoo News Australia that although it won't be launching a full online shopping service soon, it will venture into e-commerce when the model is right.
"We are keeping a close eye on the e-commerce opportunity as we look to maximise customer convenience; however, we believe our fundamental responsibility, particularly now, is keeping the price of customers' weekly shop as low as possible," Aldi's Director of Consumer Interactions Adrian Christie said.
"One of the major ways we are able to offer the highest quality groceries at the lowest prices is our streamlined business model that is focused on simplicity," Mr Christie added. "While we are always looking at the environment and considering an online experience, we won't bring this forward until we have a model where associated overheads of e-commerce in no way compromise our ability to deliver low-priced groceries to Australians."
Why online shopping could drive Aldi prices up
While Aldi going online may appear to be a good idea from a consumer perspective, the impact of adding an e-commerce platform to the German retailer's portfolio may actually push prices of goods up, retail expert Gary Mortimer explained.
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"I would imagine it would put upward pressure on prices, specifically Aldi's prices, because the costs of online are significantly more than in-store. When we're dealing with in-store food and groceries, businesses are operating off of narrow margins," Professor Mortimer explained. "When you move online, you're having to employ more people to pick, pack and potentially deliver. So as costs go up, either the retailer accepts lower margins or they push prices up to cover for that cost, that loss."
In a sector that is dominated by Coles and Woolworths, which together bring in about $8 billion in online revenue, Professor Mortimer explained that online sales are only a small proportion of overall sales, so for Aldi to come in and carve out some market share would be quite challenging.
'Good, different' could become same, same
"Aldi is known for its experience — its specials, limited quantities, the thrill of the hunt — you kind of lose that experience when you go online. It's not the same experience. Going online, they start to move away from their 'Good, different' value proposition and move into kind of the same as everybody else," he added.
In terms of strategy, Professor Mortimer believes that a move online would not be right for a supermarket chain like Aldi. "I don't think a move online would benefit Aldi strategically in the long term. I think it puts added cost into the business and you're trying to capture a market that's already shopping with the majors," he stated, stressing that by doing so, Aldi would lose its point of difference.
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