The rise and rise of Aldi

Aldi is arguably one of the biggest disruptors to hit the Australian economy over the past 20 years, single handedly busting open the Woolworths/Coles supermarket duopoly.

Aldi now has 570 stores nationwide, capturing a 10% market share, and is expected to open another 20 stores this year. In the process, Aldi has expanded its footprint beyond Australia’s east to all states and territories, other than Tasmania and the Northern Territory.

Aldi’s sales are also booming, growing by 10% to around $10.5 billion 2020.

Aldi Australia’s CEO Tom Daunt says the supermarket group has “dramatically changed the retail landscape” and claims that Aldi has saved Australian consumers some $6.6 billion since it opened via its competitive pressure and lower prices:

“It feels like it has gone very quickly, but we have dramatically changed the retail landscape in that time and I think that is recognised by all market observers including our owners who came to Australia with fairly modest expectations, and a somewhat quirky and different kind of grocery store”…

Morgan Stanley previously estimated that Aldi operates on an 18% price discount to Coles/Woolworths and expected Aldi store numbers to rise to 800 stores and its market share to grow to 15% by the mid-2020s.

I have been a regular Aldi shopper since 2003 when I lived in Canberra.

In addition to its competitive prices and good product quality, I like the simplicity of Aldi.

Having a small footprint and limited product choice makes shopping quick and easy. Products are always in the same spot irrespective of store, making them easy to find.

By contrast, I find Woolworths and Coles too large and confusing, and I often waste time wandering aisles trying to find what I need.

Whether you are a fan of Aldi or not, one cannot deny that the competitive pressure applied to Woolworths and Coles was needed and has helped drive down costs for consumers.

Hopefully Aldi will expand into Tasmania and the Northern Territory, providing those households with the same competition benefits.

Unconventional Economist
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Comments

  1. happy valleyMEMBER

    ” … and I often waste time wandering isles trying to find what I need.”

    Try wandering aisles, rather than isles?

  2. Ritualised Forms

    I’ve got to say, I am generally an Aldi man and the biggest single factor in that is that they still serve people.  None of this trying to shunt people to serve themselves, but real people doing real jobs involving service. Normal helpful Australians as a general rule too.

     

    Then there is the small matter of price. Aldi have a smaller range, but they are cheaper, particularly for meat and vegs

    • I like not being served. No need for inane greetings and small talk by the cashier. I don’t care how your day is, and you don’t care about mine.. The only thing worse than awkward silence is small talk.

    • Aldi may have been a disruptor but it is not the low priced outlet that many espouse. Most of Aldi products are similar to Coles and Woolies branded products and are a similar price with a few cheaper exceptions. Service has always been far better at Coles and Woolies but where Coles and Woolies excels is with their specials and rewards. When you use either Flybuys or Woolworths rewards consistent discounts can be achieved upwards of 10% on the shelf price if the promotions are used properly also if bulk purchases are made and items purchased are only ones on sale or generic branding Aldi doesn’t even come close.

      Discount the no credit card charge and the fuel discounts too on top of the fact that the Australian companies retain profits in Australia why would I shop at Aldi. I check things out twice a year to make sure nothing has changed but still conclude the best places to shop are Australian owned.

      • DingwallMEMBER

        Aldi as a disruptor is more so for being a big, third option against the big two.

        As for “the best places to shop are Australian owned” I would tend to agree however with Woolies and Coles this is not the case. They both are endeavouring to destroy Australian brands and that brand’s uniqueness. They take often beautiful products off the shelves and replace them with utter sh!te “home” brand options that are cheaper and are generally awful products – often from overseas. All in the name of getting better margins. Instead of using quality competitiveness they are actually meeting Aldi’s cheap/less quality (in general that packet of chips at Aldi sits in the lower quality half compared to the (remaining) range of choice at either Coles or Woolies) model.
        PS Aldi does serve some quality products however they are usually the Weekly Specials in limited supply.

      • Coles & Woolies overrated like qanta$$. Bloated with sugar, lollies aisle end special and ever changing (doubling/ halving prices) not to mention sub zero temps and security marshals sat self checkout. Service only for smokes & tobacco. No thanks WOLES & Coolies GGF

      • Australian ownership? Coles and Woolworths have significant foreign shareholders from investment cos. like Black Rock, Vanguard etc., pension funds and individuals. Australia is attractive for foreign investors for being in the right place for the Asian Century, transparent investment and tax rules while Australian companies would struggle on local shareholder equity alone.

        • From what I have read despite any foreign share ownership Coles and Woolies are Australian companies listed on the ASX and submit returns to the ATO with taxes paid accordingly. Aldi is privately owned and the profits go to its offshore owners so buying from Coles and Woolies helps more Australians

    • At similar prices woolies and coles generic branded foodlines recently independently tested as much healthier than those of aldi. Salt and sugar especially high and other nasty additives too in the aldi stuff. Just go read and compare ingredients on the labels and see a bit of the crap that has to be listed there for yourselves. A multitude of nasties can be hidden with some cheap extra salt and sugar..

        • Aldi foods bad health ratings? I read it somewhere last year, but here is some to go on that rings the same alarm bells:

          Aldi has some of the nation’s most unhealthy food on its shelves, new study finds – SMH, Esther Han April 30, 2019 https://www.smh.com.au/national/why-woolworths-is-a-better-option-than-iga-for-own-brand-products-20190429-p51iaf.html

          georgeinstitute.org/videos/foodswitch-the-state-of-the-food-supply-report

          Media release: 30/04/2019 https://www.georgeinstitute.org/media-releases/in-the-battle-of-the-own-brands-woolworths-tops-the-list-as-the-healthiest

          Media release: 02/09/2020 georgeinstitute.org/media-releases/woolworths-home-brands-still-healthiest-but-could-do-better-report-finds

          19 March 2020 – choice.com.au/shopping/everyday-shopping/supermarkets/articles/aldi-best-buys-and-things-to-avoid
          “Heavily processed own-brand products. Be sure to look at nutrition labelling when you shop. A recent report found that Aldi has the highest amount of ultra-processed own-brand products on its shelves, compared with the other major supermarkets. So keep an eye on things such as added sugars, fats and preservatives.”
          – Is that choice seeking a bribe?

          20 August 2020 – choice.com.au/shopping/everyday-shopping/supermarkets/articles/supermarket-house-brands-which-wins-on-taste-woolworths-coles-aldi
          “Who comes out on top for taste? Aldi, and quite convincingly! The European supermarket chain upstaged its bigger rivals with six wins (four outright, two tied) across the ten categories. Woolworths and Coles tied in second with three wins apiece.”
          – Bribe request successful was it? Yet despite choice taking bribes they may be correct in evaluating Aldi brands as tasting better. But with all the extra additives, and high levels of taste masking analgesic dopamine kicking sugar and salt they would wouldn’t they?

          APRIL 22, 2019 Aldi in USA mashed.com/150958/aldi-products-with-horrible-reviews/?utm_campaign=clip
          “…And if you’re still on the fence about swapping out your favorite cereal, you may want to consider the nutritional value of some of Aldi’s store brands. The Aldi Reviewer points out that some of the Millville brands have a higher sugar content, much like their name brand counterparts. Some are even higher. For example, Aldi’s version of Corn Pops has 15 grams of sugar in each serving, compared to 12 grams of sugar in the Kellogg’s version.

  3. chuckmuscleMEMBER

    While I also like Aldi, their fruit and vege is consistently utter shyte. Tasteless and usually goes off after a couple of days, or doesn’t change at all as I have experienced with their bananas not changing colour for 2 weeks! The meat is also terrible,with the exception of the ham. Think people become conditioned to substandard quality, know I certainly did, then on the off chance try actual fresh fruit and vege, are shocked when reminded that this stuff can have taste!!
    The chocolate on the other hand (salted pretzel is fantastic)!

    • When’s the last time you went? It’s seems on par with coles and woolies to me.

      I’ve seen a couple of did batches of meat but most of the meat has been great that we’ve bought. And I’d you see some did meat – don’t buy it.

    • kierans777MEMBER

      All the fruit and veg at supermarkets is terrible compared to locally grown, not picked off too early so that it ripens in transit, not sprayed with Roundup options. Or home grown. Switching to locally gown dramatically improved both taste and nutrition.

    • DingwallMEMBER

      Fruit and Veg, and meat from local markets for me – cheaper and fresher. And as a big bonus, the markets usually have high quality, diverse options direct from small specialty producers. These can be more expensive but you know that money is really going to a Australian producer passionate about their product.

    • Aldi’s grocery lines test far higher for sugar and salt then other supermarket’s similarly priced generic brands. Extra sugar and salt to mask the taste of crap.

    • Ha Ha as if WOLES & Coolies has fresh veg & unadulterated meat. Laughable. You obviously don’t know a late teen or ‘special’ worker doing 20 hours a week in deli /butvher at coles…you’d soon be singing a different tune

  4. The Incomparable Mr Flannery

    No wonder you can’t find anything, wandering the isles and all. Isles are for whisky and swashbuckling pirate antics.

    • Really? It couldn’t be any more efficient. It’s super fast, even with only one check out most of the time.

      Or do you prefer doing it all yourself and paying full price for a lot of stuff like a chump at Coles and Woolies?

      • The Incomparable Mr Flannery

        I prefer Coles for a number of reasons, product range and checkout speed are but two of them. The lower prices on an insufficient range of product doesn’t appeal to me, but that’s great if it does for you.

        Your Aldi must be properly staffed, I suppose. I tend to like to avoid massive lines – does Aldi have self checkout?

        • No self checkout at Aldi because it doesn’t need it, it’s a waste of space and it blows my mind how customers have lapped up doing the bagging and scanning work themselves elsewhere whilst still paying top for everything not on discount.

          Agreed on product lines being insufficient – we buy a couple of bits and bobs from coles and buy the 90% of other times from Aldi (same building so it’s easy). Saves easily $10/week/per person. That’s $2k p.a. minimum for a family of 4, most families can’t ignore those savings.

          • The Incomparable Mr Flannery

            2k?! Chortle! That’s the monthly Ladbrokes budget.

            So many assumptions and projections around sentiment, convenience and local experience.

            Horses for courses.

        • If your budget for ladbrokes is legit $2k per month and you don’t have a gambling problem, I can see how you perceive Aldi to be beneath you as I assume your annual income is $300k+. If it’s not, get some help dude.

          For the rest of us, if you can save $500-1000 p.a. for, location of the Aldi as a caveat, no actual downside, many will and are. Hence the article.

          • The Incomparable Mr Flannery

            I only make winning bets! If there was a Hermes supermarket, I’d be all over that like a Liberal staffer over a desk.

          • darklydrawlMEMBER

            Heh… Now I know you are kidding. If you only make winning bets (or merely ‘better than even’ winning bets), companies like Ladbrokes and their ilk will ban you from their platform.

        • Try shopping Coles Carlisle St for speedy checkout… hope you’re unemployed with lots of time on your hands or super rich & stupid

    • run to the hillsMEMBER

      Agreed, it’s a joke, much rather serve myself at Woolies than queue at Aldi.

  5. A lot of Aldi product are better than expensive brands at Cole/Woolies: coffee, bread, cereals, cheese, ham, sweets, cookies, dried fruits, nuts, ice-cream, honey etc.
    Meat, rice, potatoes, pasta are the same with the prices lower at Aldi. Fruits/veggies are mostly worse with some exceptions.
    In general, Aldi saved our family so much money, I am very happy with Aldi.

    • Word to the wise. Everything made here is made in the same factories as the woolies and coles stuff. they just charge less.

      • There is a line of chocolate biscuits in the three supermarkets that all come out of the same factory in NZ.
        The Aldi taste best, the Woolies one is awful.

        Most Choice taste tests put Aldi at top or top half.

      • Similar products but ingredient variations are no problem on the same factory line. Check the ingredients labels for the higher salt and sugar in the aldi stuff. Such higher additive levels mask the taste of higher crap levels. Other nasties that don’t have to be listed on Oz food labels are probably significantly higher too. The takeout is your family may live healthier lives and longer by consuming woolies and coles generic stuff. AND many of their cheapies independently test as better than many name brands.

      • Yep they use same model world over:) I love the idiocy of Australian supermarket snobbery & its defenders. Thanks for the laughs

  6. I can understand buying from an overseas brand over a local one when the cost difference is 30% or greater.. but for 18% wouldn’t you prefer to buy Australian?

    Spudshed for me – cheaper than Aldi and Australian owned.

    • When the quality is equal, and in many cases better, and they are cheaper even though they have made them in a foreign country and shipped them to Australia … why would you buy over-priced Australian products.
      Australian manufacturers need to work out why they are so uncompetitive.

    • Although ALDI as a company & brand is Germany owned, its products sold in Australia are ‘made/produced in Australia’ to a similar degree as Woolworths/Coles. So you can still shop at ALDI and ‘buy Australian’.

      Or are you also advocating boycotting IKEA?

  7. what has impressed me is how they have turned around from having dismal fresh fruit and veg to completely outstripping the duopoly on the quality and price of fresh

  8. How about boosting IGA, locally owned stores ? Instead of these oddball time-warped quasi post-communist Eastern European grocers.

      • Local butcher, grocer and baker any good? Kill/grow your own?

        I can’t go to supermarkets for anything but cleaning products, and these I’m going to start buying online. Supermarkets of all kinds make me feel miserable about the world.

  9. Shows that price matters, but not at the expense of quality, or perceived quality at minimum.

    I think Bi Lo had a real missed opportunity to basically copy Aldi and use it’s existing footprint to become a proper low cost provider under a different brand without looking as povo as it did.

    • “BI-LO was an Australian supermarket chain owned by Wesfarmers. Once a chain of 180 outlets, BI-LO stores were progressively re-branded as Coles Supermarkets from 2006,”

      The answer as to why is above.

      • Huh? Yes they rebranded as Coles but as per this article, Aldi is eating their lunch in the low end. Wesfarmees could have batted it off by making Bi Lo restructure to compete, only imo, but chose not to.

        • They really have 2 choices, either try to compete in low end, or try to maintain the status quo and hope aldi don’t take too much market share. so either convert coles to bi lo, or bi lo to coles.
          Increasing bi lo market penetration would just eat away at coles more than at aldi.

          • Yes, agreed. But the former wasn’t given a chance, and the latter is/was happening anyway.

            Disagree on Bi Lo eating Coles grass – different brand, would be a different story layout with reduce size, basically just copy Aldi in whatever way makes sense and restructure the stores to be 2/3rd their size. All academic now anyway.

          • Part of the issue is adding a direct copy of aldi increases the market share of low priced supermarket and may make someone else international want to enter the market as well, better just to concede aldi’s share than actively increase the low end market.
            At least I bet that is their theory. Time will tell if they are correct or not.

          • Aldi’s German twin will not come, Kaufmann pulled out before starting.

            Carrefore is getting into a lot of strife. Waltons need $10/hr labour to maintain the Walton grandkids’ inheritance and is losing ground in the US.

  10. Aldi is OK and I definitely prefer it to Wollies but for most things I’m more of a Harris Farms shopper. That said I like to get my meat from a proper butchers, especially if I want anything that’s a little outside the ordinary. I grew up eating a lot of Rabbit, I still love a good Rabbit stew but I just can’t stomach that farm raised stuff.

      • The Incomparable Mr Flannery

        Same. Often will get stuff cheaper than Aldi (90kwbeasts’ head will explode) and great range of continental/Euro/Indian stuff that Coolies doesn’t stock.

      • For me the my Butcher is also a sort of relationship business.
        he texts me when he has something special in like wild pig or rabbit, I reward this service by buying the rest of my meat needs at the butchers. If I decided to only buy specialty items the butchers (and others did the same) then it wouldn’t be long before the butchers closed and I was back to buying absolute rubbish meat from Wollies….what can I say I value this service so I make sure it is properly rewarded.

      • I was waiting for you to say that you cheeky bugger! Shopping at aldi for non perishables and other bits and bobs makes sense. Fresh fruit/veg and meats nah.

        Mind you I just get home delivery from woolwooths. Because it saves a bucket load of time and I’m lazy. 🙂

    • I would love to shop at the local butcher but it’s so expensive it would be impossible for weekly shops and this is after I have cut down overall meat consumption probably around 50% from 10 years ago. I know the meat is rubbish from the supermarket but it’s also very expensive from there compared to when I moved here in 2011.

      Sucks.

  11. Hey Aldi, when are you coming to Darwin?

    We have a direct train line up from Adelaide. Just bung everything on it and you’re good to go.

    • rob barrattMEMBER

      Darwin? Isn’t that part of China? I assume they’ll be turning up to claim it in a year or two…..

  12. I think you need to be careful in grouping Woolworths and Coles, Woolworths is a food distribution company not a supermarket like Coles, hence the reason for Coles’s poor share price performance over the last couple of weeks in which Woolworths fared pretty well.

    Woolworths will cement their position when the ACCC ok’s the PFD takeover.

    Coles’s strategic mistake for a number of years is competing with Woolworths when in actual fact they should be taking on Aldi.

    • I thought Woolies was a pokies/grog company with a few groceries to take home afterwards.

      Any company that lets Linfox take over its very efficient own distribution fleet is not a distribution company. The Foxes have some expensive hobbies/monopolies to maintain from their (extra) margin.