Aldi, the German discount supermarket chain, has decided against expanding into online shopping in Australia, despite aggressive moves in this area by competitors Woolworths and Coles. The decision comes as Aldi continues to grow its market share without needing an online presence.
Since opening its first store in Australia in 2000, Aldi has captured about 10.5% of the supermarket market. While Woolworths and Coles have been expanding their online shopping capabilities, including Woolworths’ recent acquisition of the defunct ultra-fast delivery service Milkrun, Aldi has chosen a different path.
Jordan Lack, Aldi’s Managing Director of Buying, explained that the decision to forgo online expansion was driven by a focus on maintaining low costs. “Our primary concern is keeping costs low, which directly impacts the prices we offer our customers,” Lack told The Australian Financial Review. “With the financial challenges families face today, the priority has shifted from convenience to value. We are growing in market share, volume, and customer base, and our data shows that price is a key factor for consumers.”
Aldi’s commitment to low prices is clear. Last month, consumer group Choice reported that Aldi was about $17 cheaper for a basket of essentials compared to Woolworths and Coles, representing a 25% savings. Despite this, Aldi has had to implement price increases due to rising production costs over the past few years.
In 2021, under former Aldi Australia CEO Tom Daunt, the retailer took tentative steps into e-commerce with “online exclusives,” selling items like fridges, freezers, and mattresses. However, the company hesitated to expand to food and groceries online. That same year, Aldi sold and leased back its distribution centres in a $930 million deal as part of a supply chain transformation. Aldi plans to open its first automated distribution centre in Victoria by 2028, with another planned for NSW.
Lack also mentioned that Aldi has abandoned plans to expand its smaller, inner-city “Corner Stores” format. Instead, it is focusing on new products like Aldi Insurance and expanding in growth areas on the outskirts of major cities. Currently, Aldi operates seven Corner Stores, which are about half the size of traditional supermarkets.
Recent data shows Aldi is successfully attracting new customers. “In the last three months, we saw a 5.1% increase in new households shopping with Aldi,” Lack noted. “Customers come for the price, but they stay for the quality. We’re working to make Aldi the first choice for more shoppers.”
Circana data indicates that while the overall supermarket market grew by about 1.1% in the June quarter compared to the previous year, Aldi’s volume grew by over 7%, significantly outpacing the market. A recent survey of supermarket suppliers by UBS also highlighted Aldi’s gain in market share last quarter.
In summary, Aldi’s strategic focus remains on providing low-cost, high-quality products. With no immediate plans to enter the online shopping market in Australia, this approach has been effective in attracting and retaining customers, even as the retail landscape evolves.
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