Will Aldi become a new Market Leader?

Aldi LogoMy family has always shopped from the major supermarkets like Woolworths and Coles. However, since Aldi opened in the local shopping center 2 years ago, my wife decided to give their products a try; given that similar products are at a fraction of the branded good’s prices that are offered in the major supermarkets and they have different products that are on bargain in their weekly catalogue.

Since its inception, German based Aldi has changed the landscape of the Supermarket and Grocery Industry in Australia. Woolworths and Coles that used to dominate the Supermarket and Grocery industry in Australia is now facing a fierce competition from Aldi.

Aldi’s exceptional marketing strategy which in line with the company’s philosophy of creating great value for all customers; has produced outstanding results for Aldi since the inception of operations in Australia in 2001. Aldi’s market shares has been increasing favourably since its inception while Woolworths and Coles has been struggling to keep up.

Australian Supermarket Market Shares

Aldi’s target customer base are for lower-income families who are looking for products that are value for money. Aldi offer their private label and not all the product lines like its competitors. Hence, one may not be able to get all the products and groceries that one would need from Aldi. Aldi’s target segment are only about 700 product lines that are usually basic household essential products such as milk, biscuit, bread, dishwasher and detergent. However, the main attraction is Aldi’s weekly specials that consist of random products at a bargain price that are only available on a limited time in the store. For example, when Aldi launched a line of children’s clothing in collaboration with Collette Dinnigan (an Australian Designer), there were major queues with shoppers rushing in to grab branded children’s wear at a fraction of the price usually offered in a Collette Dinnigan boutique.

wp-content_uploads_catalogue_aldi_aldi-special-buys-week-13_16Aldi offers products that are mostly made in or imported from Germany and is similar to the products offered in major supermarkets. The only difference is the pricing on these products being cheaper than the branded products offered in the major supermarkets. An Aldi weekly catalogue illustrated a household can save on a whopping 71% on dishwashing tablets by switching to the Aldi brands. This evidently is a very successfully targeting strategy as Woolworth and Coles has responded by reducing their private labels to compete with Aldi brands.

Aldi position its marketing strategy as a supermarket that has no frills and has basic store outlay that provides high quality items with low prices to customer. It has lower operation cost where the Aldi stores are generally smaller in size as compared to Woolworths and Coles stores. Furthermore, the store layout in Aldi generally differs from the major supermarkets. There is a minimal shelving in Aldi and most of the products are stacked in pallets and boxes instead. Hence, you will rarely see any Aldi staff performing stacking roles in the store if compared to Woolworths and Coles. As such, Aldi has an excellent cost leadership that supplies goods and services more efficiently than its competitors.

Industry Space Summary.png

As the products sold in Aldi stores are not publicly well-known brands, Aldi have partnered with a blogger named “Aldi Mum” to promote and share product reviews with general public who has a less knowledge about the Aldi Brand product. Through this channel, Aldi is able to break through customer barriers on its product awareness. Furthermore, Aldi Mum’s review and feedback is used for continuous improvement for the Aldi Brand and to understand the current needs of its customer segments.

The forecast for the increase in number of Aldi stores that will be opening in the next 5 years in Australia will see the current market leaders, Woolworth and Coles, facing an intense challenge to maintain its market share in the supermarket and grocery industry.

Author : Damien Lai / Email : dlai@deakin.edu.au

Username : damienlai/ Student ID : 215288904








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