growth

We’ll drink to that: Aldi brands challenge not only price but quality

Kevin Moore /

Whether trading as Aldi, LIDL or Trader Joe’s, the rise and rise of the small product range, high quality, low price, retail-own brand focused stores in the overall “Aldi” family group is impressive.
 
I shop CBD grocery stores as often as possible to see how small format Walmart, Coles, Tesco and Aldi stores stack up, and without exception the smaller format Aldi and Trader Joe’s stores I visit are always the busiest, irrespective of city.
 
It may be that the smaller formats always ”feel busier” just by dint of the squeeze of traditionally time-poor metro shoppers getting in and getting out. It may also be that in the Aldi stores there is always a circle, or “figure of 8” of shoppers looking at the specials area for the incredibly low priced durables (non-food items) on sale and in stock that week, and that week only – from ski gear to power tools.
                                     
Whatever it is, it continues to work, with almost 10 years of constant quarterly growth behind almost every Aldi store of the near 10,000 stores in its international network (including the now 311 stores in Australia since opening in 2012) in every one of the 17 countries in which it operates.
 
One of the key elements has been simplicity. There is everything you need to feed you or your family well and cheaply in an ALDI store, but with a very small range of items simplifying the need to choose. This simplicity of range is the backbone of convenience shopping, so it stands that it would work well in a CBD retail environment.
 
But Aldi turns the convenience model on its head by being cheap. We are all happy to get back some time in exchange for some money. We as shoppers are happy to pay more to spend less time shopping. This gave us the high growth rate in retail space based on high priced convenience stores around the world.

But Aldi does it cheaper in its CBD stores than a major grocer can in their large out-of-town discount stores. But the quality is not as good because it’s only Aldi’s own brands? And retail own brands aren’t as good as national or international brands. Right?
 
Well in some cases, yes, but not all. I’ve talked about Aldi cheese in its Australian stores for many years, but with the rollout of more and more alcohol in Aldi stores in Australia I thought it worthwhile to look at the UK for examples of the price and quality of beer, wines and spirits.
 
All the prices below are in UK pounds sterling, to give you a feel for price relativities. The quality relativities are based, as with the Australian cheese results, on specialist industry judging panels “blind reviewing” a wide range of products in their sector, irrespective of where made, or by whom.
 
At the International Wine and Spirit Awards in the UK earlier this year, Aldi’s Oliver Cromwell London Dry Gin (GBP9.65) was judged the second best gin in the International Spirits Challenge, ahead of Bombay Sapphire Gin (GBP21.70) and Hendricks Gin (GBP26.39.) Now I am partial to a gin, and Bombay Sapphire is my favourite, but a retail own brand with better quality for half the price?
 
I like champagne too. My favourite brand has been Veuve Clicquot for almost 30 years. At the International Wine Challenge, Aldi’s retail-own brand champagne (sounds like an oxymoron) Veuve Monsigny (GBP13) again came in second ahead of champagne icons like Moet & Chandon, with judges claiming it was better than Veuve Clicquot La Grande Dame; not just my favourite, the orange label Veuve Clicquot, but the top of the range Premier Cru with a price 10 times higher at GBP130.
 
These subtle, but continuous results, when released, surprise shoppers. Many non-Aldi shoppers want to try the products if only to challenge the results and disagree. Either way, they visit an Aldi store for the first time, try the product and many keep coming back. That’s why Aldi’s UK and US share of “middle-class” shoppers continues to rise.
 
Retail-own brands aren’t what they used to be; they just keep getting better.

Kevin Moore is the chairman of Crossmark Asia Pacific Holdings.

 

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Kevin Moore

Kevin Moore is a retail expert and the chairman of Crossmark Asia Pacific Holdings and Now Comms Group. He is also an independent director of Australian fintech company InvestSMART.

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