Under increased scrutiny from the Australian Competition and Consumer Commission (ACCC), German discount retailer Aldi has provided some insight into its notably low pricing strategy, distinguishing itself from rivals Coles and Woolworths. Aldi has long maintained its position as a significantly cheaper option, with recent explanations highlighting why this is the case.
Aldi attributes its affordability to a streamlined, cost-effective approach. The stores are compact, employ fewer staff, and keep their product selection highly focused. Unlike Coles and Woolworths, which stock upwards of 20,000 to 25,000 items, Aldi shelves carry a limited assortment of around 1,800 items. This minimised range means a typical product, like raspberry jam, offers only one choice at Aldi, whereas larger supermarkets offer multiple brands.
This simplicity, according to Aldi, reduces supply chain costs and operational complexity, allowing for substantial savings that can be passed on to shoppers. A similar view is shared by retail experts, who note that smaller selections mean fewer suppliers and wholesalers, resulting in economies of scale that support lower prices.
Over the next two weeks, the ACCC will question leaders from Aldi, Coles, Woolworths, and Metcash, an IGA affiliate, on their pricing structures, ultimately reporting to the Government in February. This investigation aims to shed light on how pricing practices affect Australian consumers at the checkout. While some hope the inquiry might drive prices down, the likely outcome is increased transparency into how these major retailers set their prices.
Meanwhile, Aldi stands by its approach, asserting that fewer choices can lead to better prices – a model that’s already proven effective in keeping costs low for its customers.
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