Aldi Case Study

The changing grocery shopping era has arrived, and opportunities for grocery companies abound. However, with those opportunities, come risks that threaten to lead long-standing marketing strategy and tactics obsolete due to the rapid changing target market. This era is being shaped by a new series of consumers with different shopping behaviour. Inventible failure would happen in highly intensive Australia market if companies were not familiar with their new customers (IBISWorld Industry Report G4111, 2016). In the flowing tables, demographics and needs of both traditional segments and modern segments are illustrated. As can be seen in the tables, even though there are several differences between diverse segments, elements such as convenience, time/effort conscious and price/quality relationship are their common pursuit.

Source: Source: Madeleine Ross, 2012, The changing face of the grocery buyer; McKinsey&Company, 2014, Perspectives on retail and consumer goods

Source: Madeleine Ross, 2012, The changing face of the grocery buyer; McKinsey&Company, 2014, Perspectives on retail and consumer goods

Strength and weakness analysis
Aldi, a world famous discounter, entered the Australian market in 2001. With revenue CAGR at 17.9% during 2011-2015, Aldi now is the third largest supermarket in Australia market with 9.1% market share (IBISWorld Industry Report G4111, 2016). Such a boost of market share is due to several strengths perceived by consumers. First and foremost, diverse categories of organic food meet the needs of the growing number of health conscious customers (Soccer mums, golden oldies & DINKS) (Ross, 2012). In addition, one of the most important factors to strengthen purchasing intention is cost performance due to wide range of private label goods and operating efficiency (Audi Group in Retailing, 2016). Further, satisfied by shopping experience, the power of word-of-mouth dramatically increase Aldi’s reputation and trustworthy. However, there is no denying that Aldi also has weakness compared with Coles and Woolworth. Firstly, the limited product range restricts consumers choice. In detail, a typical Aldi store stocks about 1,000 products, compared with about 30,000 in an average Woolworth or Coles store (IBISWorld Industry Report G4111, 2016). Moreover, in-store shopping is the only channel. The official website only offers product information and customers’ review, which drives consumer who want to shop online away. Furthermore, mobile App is shoddy and users rate it 2 star out of 5. Pointless shopping list and user unfriendly interface are not the only annoying elements. What matters is no synergy between App and in-store shopping experience. The two scenarios below can further explain In detail, consumers want to see product reviews in mobile App during in-store decision making process, while they have idea in accessing the specific item in App due to the fact that no search function and category filter in the App. In another scenario, consumers browse App and decides to purchase a product, they do not know specific item location in store because App does not have navigation or guiding information.

Source: IBISWorld Industry Report G4111, 2016; Euromonitor, Aldi Group in Retailing, 2016; On-the-spot investigation

Recommendation

With no doubt, China, UK and US have the most advanced e-commerce environments all over the world. Even back to 5 years ago, a large proportion of customers in these countries are frequently online grocery buyers. In comparison, although Internet penetration is strong in Australia, this country lags others mentioned above in making online purchases, one-third as much online as US consumers on a per-capita (Bain&Company, 2011). 2014