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Introduction to the Grocery Market in Australia

Question:

Discuss about the Market Analysis Of Aldi  Retail Industry.

Australian grocery buyers have spent over $90bn in the supermarkets in the year ending March 2017. This business is expected to grow manifolds owing to increasing population, higher number and accessibility of stores across the country and a growing efficiency of these stores. The increasing population leads to an increase in demand, higher number of stores create more brand awareness, higher accessibility of the stores lead to brand visibility and growing efficiency of the stores lead to ease of shopping experience.

In this food and retail industry, Aldi supermarkets are a leading name with over 13.2% market share that continues to grow. They have over 10,000 stores in 18 countries across the globe. It faces severe competition from Coles and Woolworths which are well established names since early 1900s. Aldi provides employment opportunities to various Australians and consistently puts efforts in supporting Australian farmers by procuring supply directly from them (Aldi, 2017).

Marketing becomes an essential part for any firm to establish its presence in the country, especially in the face of increasing demand and competition. Right marketing can decide the image of the brand that people hold in their minds and what is there perception of the brand. This article throws light upon the marketing strategies used by Aldi Australia and strategies recommended for the coming years.

Established in 1916, Aldi supermarket chain is one of the leading discount stores based out of Germany. Aldi is a common brand for two global supermarkets Aldi Sud and Aldi Nord both respectively owned by two brothers. Started as a single grocery store in Essen, this distinction between the two brands came about in 1962 and they have been legally separated since 1966. The brand currently operates over 10000 stores in 18 countries across the globe.

Aldi Australia was created to fill the void in the discount supermarket business that was created by closure of Franklins. The first store was inaugurated in 2001 in the heart of the country, Sydney. Since then, the conglomerate has shown a steady grasp of 13.2% on the Australian market (Roy Morgan Research, 2017). Aldi has positioned itself as a low cost store that offers consumers good quality products. This positioning strategy has helped Aldi gain customers and establish themselves as a successful and well-known brand in Australia.

Aldi brand was founded by Brothers Karl and Theo Albrecht in 1946 as a small grocery store outside their house, however the firm was remodeled from a shop run by their mother in the local area to a showroom with efficient operations and procurement strategies in place. Both the brothers had a good show running until 1960, post which they parted ways over not being able to reach a consensus on the idea of selling cigarettes.

Overview of Aldi Australia

Aldi supermarkets believe in private branding and hence they own most of the brands that they sell. However for certain items, they sell other organization’s brands but that number is strictly capped to two brands per product line. By placing as much as 90% of items under the private label, ALDI removes the middleman and hence is able to pass those savings to the consumer (Business Insider, 2015). In order to maintain the quality as high as those of private brands, Aldi asks of its suppliers to sign extremely grueling ethical sourcing lineups and auditing regimes (The Australian, 2017). This has led to increased loyalty of Aldi customers as they get the good quality products at a lesser price. This has also helped in overall raising of the industry standards as other supermarkets have followed suits and ensured their quality remains high in order to remain competitive.

Aldi has effectively understood the time crunch faced by Australian citizens. Most of the time mom and pop shops earn their business from clients who do not wish to visit the supermarket just to buy a small number of products (NBC News, 2004). Aldi claims that the entire process between the customer entering the supermarket and leaving after making payment is 40% quicker than its rivals (The Sun, 2017). At present, the supermarket checkouts run with an industry leading efficiency. Aldi products often have multiple barcodes to speed up the checkout process. Long conveyer belts are also added which allow the customers to unload their trolleys in a single go (Forbes, 2017).

Every firm tries its hands at gaining feedbacks from customers and implementing it. Some do it by the means of mailing feedback forms, some achieve it by keeping a tab on repeat purchases of their products. Aldi testers club came into being as a unique proposition where its own customers are often sent products and are asked for reviews. Since most of what Aldi products are the firm’s private brands, changes are made to the products upon receiving the review. This is the firm’s attempt to ramp up its quality and involve customers in their product design. This not only ensures that the goods produced are well appreciated by the consumers but also significantly enhances shopper’s loyalty as now they feel more associated with the company. This is evidenced by the fact that when the club was launched, it was swamped with over 10000 applicants across the country (The Australian, 2015). As a part of their annual membership plan, Aldi testers receive 10 grocery products per quarter and it is compulsory for them to rate at least 50% of them.

Aldi Australia's Unique Marketing Strategies

Above the line promotions done by a brand include those that the brand has paid in order to target a mass audience. They are usually done by firms in situations where there is no specific target market and the brand wishes to achieve awareness at a mass level and leave an impression on the minds of the consumers.  

Aldi uses 20 second television advertisements that use humor to build trust among its viewers (Aldi YouTube, 2017). They often show a well-known brand placed next to and Aldi product with ‘Like brand, only cheaper’ written below. The advert went down so well with the consumers that it won several campaign of the week awards (Retail Week, 2013).

Creative leaflets are distributed across every store that contain information about upcoming offers and given to all the customers visiting Aldi stores.

Newspaper ads with Aldi’s ‘Swap and Save’ message are printed and wherein Aldi products are compared to products of other brands and readers are made aware of their savings upon buying the Aldi product. Research conducted also showed that on an average a consumer saves $80 on a shopping basket by replacing with Aldi products (Central Western Daily, 2017). The testing baskets contained 33 items each.

Below the line promotions are customized and targeted to a specific set of consumers

Aldi Australia’s Facebook page has 522007 followers (Facebook, 2017) and twitter page as over 25300 followers (Twitter, 2017). Aldi personnel aim to reply to every tweet and Facebook message that they receive.

Direct emails are sent to customers on their birthdays and anniversaries with greetings from Aldi stores and often a gift voucher.

Aldi allowed one of its Muslim checkout worker to not sell alcohol as it is against his religious beliefs (The Sun, 2017). These kind of generous acts add to the company’s brand image and build trust among people.

At the current rate of digitalization in the economy, it becomes imperative that firms have an online presence. Aldi’s competition is not limited to offline stores of Woolworths and Coles but has also advanced to 7eleven, Target and groceryrun. Since setting up online stores requires tremendous cost, time and human resource, a recommended strategy for Aldi would be to work on its tie ups with E commerce giants like amazon who will list, market and deliver Aldi products to due consumers.

Geo radius targeting is a way to ensure that people in a specific area are targeted to see a particular advertisement. This is accomplished by Geo fencing wherein advertisers for example will show restaurant ads to people close to a particular restaurant. Marketers can select a 3km radius from every Australian Aldi store and display advertisements in that particular area. This is a strong brand recall strategy and can help drive customers to Aldi stores.

Above the Line Promotions and Below the Line Promotions

Every new customer who visits Aldo store can be offered an opportunity to get a membership card, this membership card will collect points as and when the shopper buys products from Aldi store based on the total bills’ worth. These membership cards often create a shift in customer behavior (Forbes, 2016). Addition of points and added benefits associated with these points on every shopping will encourage shoppers to visit more often.

Word of mouth is a strategy that the firm can also encourage among its consumers. Referring customers can be given certain discount coupons every time someone new referred by them shops from the store for the first time. 

Discounted liquor has become a way of life in Australian markets. Aldi has already begun operations in five places and is offering the cheapest liquor in the country (Perth now, 2017). Expanding this liquor sales to the rest of the country is sure to increase its customer base especially given that liquor is purchased throughout the year.

Conclusion

Aldi supermarkets have conquered a 13.5% share in a $90bn grocery market of Australia. Its major competitors are Woolworths and Coles. Aldi is a leading brand which has positioned itself in the Australian market by selling high quality products at a lower price. Aldi achieves this low price by procuring directly from farmers and eliminating the middle man, selling their own private brands and not selling over two brands in the same product line.

Aldi is also well known for its fast checkout process, which the brand claims is 40% faster than its competitors. Aldi testers club was created to involve customers in brand design by reviewing products based on feedbacks directly from consumers. Besides this, marketing strategies recommended to the firm include introduction of membership cards for continued return of customers to Aldi stores. Selling liquor is expected to add to the firm’s bottom line and tying up with various Ecommerce websites can help the firm gain more customers and increase their delivery efficiency.

References:

Aldi Facebook, 2017, https://www.facebook.com/ALDI.Australia/, viewed on 12 September, 2017.

Aldi Twitter, 2017, https://twitter.com/ALDIAustralia?ref_data-src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor, viewed on 12 September, 2017.

Aldi, 2017, ‘Proudly Australian made’, https://www.aldi.com.au/en/about-aldi/australian-made/, viewed on 12 September, 2017.

Business Insider, 2015, ‘How Aldi sells groceries for cheaper than Wal-Mart or Trader Joe's’, https://www.businessinsider.in/How-Aldi-sells-groceries-for-cheaper-than-Wal-Mart-or-Trader-Joes/articleshow/46857585.cms, viewed on 11 September, 2017.

Central Western Daily, 2017, ’Aldi has the cheapest grocery basket in Australia, Choice survey finds’, https://www.centralwesterndaily.com.au/story/4712785/how-much-do-you-really-save-by-shopping-at-aldi/?cs=2452, viewed on 12 September, 2017.

Forbes, 2016, ’9 things you didn’t know about retail loyalty programs’, https://www.forbes.com/sites/bryanpearson/2016/01/04/9-things-you-dont-know-about-retail-loyalty-programs-in-2016/#7206c60d34df, viewed on 12 September, 2017.

Forbes, 2017, ‘Aldi Follows Walmart’, https://www.forbes.com/sites/timworstall/2017/03/21/aldi-follows-walmart-barcodes-and-the-productivity-of-shopping/#6c0a701662f5, viewed on 11 September, 2017.

NBC News, 2004, ‘Big Stores or small’, https://www.nbcnews.com/id/4001039/ns/business-small_business/t/big-store-or-small-why-consumers-care/#.WbaNOMgjHIU, viewed on 11 September, 2017.

Perth Now, 2017, ‘Aldi will start selling alcohol in Perth stores’, https://www.perthnow.com.au/news/western-australia/aldi-will-start-selling-alcohol-in-perth-stores-from-today/news-story/c59014afc215ba475dd1265a0e89eb4c, viewed on 12 September, 2017.

Retail Week, 2013, ‘Campaign of the week: Aldi’s like brands only cheaper’, https://www.retail-week.com/campaign-of-the-week-aldi-like-brands-only-cheaper-nappies/5049661.article, viewed on 12 September, 2017.

Roy Morgan Research, 2017, ‘Aldi hits a new high in supermarket wars’, https://www.roymorgan.com/findings/7234-woolworths-coles-aldi-iga-supermarket-market-shares-australia-march-2017-201705171406, viewed on 12 September, 2017.

The Australian, 2015, ‘Aldi launches tester’s club’, https://www.theaustralian.com.au/business/aldi-launches-testers-club/news-story/4b3bae1bf3813bc46b45aca6a45e1016, viewed on 11 September, 2017.

The Australian, 2017, ‘Aldi tells suppliers to meet ethical standards’, https://www.theaustralian.com.au/business/companies/aldi-tells-suppliers-to-meet-ethical-standards/news-story/c321c11390d9988a6eb82b1bd6a4d118#&gid=null&pid=1, viewed on 11 September, 2017.

The Sun, 2017, ‘Aldi praised for allowing Muslim checkout worker not to sell Alcohol’, https://www.thesun.co.uk/news/4325558/aldi-praised-for-allowing-muslim-checkout-worker-not-to-sell-alcohol-on-a-till-after-raising-concerns/, viewed on 12 September, 2017.

The Sun, 2017, ‘Aldi reveals how its’ check out staff scans items so fast’, https://www.thesun.co.uk/money/3134668/aldi-reveals-why-its-checkout-staff-scan-items-so-fast-and-how-it-saves-shoppers-money/, viewed on 11 September, 2017.

YouTube, 2017, ‘Aldi Switch and save TVC Adnews’, https://www.youtube.com/watch?v=81Of5x9EZKQ, viewed on 12 September, 2017.

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