Aldi has hit back at claims made by high-profile entrepreneur Dick Smith, who predicted the German supermarket chain will eventually dominate the Australian grocery market and when that happens “everything will come from China”.
Smith made the claims in an interview with author Malcolm Knox for his book Supermarket Monsters, which explores the dominance of Australia’s two market leading supermarket chains, Coles and Woolworths.
In a section of the book that examines Aldi’s growing popularity among Australian supermarket shoppers, Smith predicts Aldi will send Coles and Woolworths “broke” in 15 years.
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“If you think Coles and Woolies are ruthless, you wait. [Aldi] are the smartest retailers in the world,” Smith said.
“[Australia] will make Aldi boom because we’re just interested in the cheapest price, but there’s no doubt in my mind once they’ve got large market share, everything will come from China.”
But Aldi has fired shots back in an attempt to dispel some common myths about the discount retail chain, telling SmartCompany it overwhelmingly sources its private-label products from within Australia.
“Currently, 90% of Aldi’s core range is private label, with the majority of these products sourced from Australian manufacturers,” a spokesperson for Aldi says.
“We only source from overseas when we can’t find the product, quality, efficiency or innovation we seek here in Australia.”
Aldi is an official partner of the Australian Made Campaign and says plenty of the products stocked in its stores carry the Australian Made logo, which is something Aldi has highlighted in its recent television advertising.
The spokesperson says independent audits have also confirmed the vast majority of Aldi’s fresh produce is sourced locally.
“Independent audits have confirmed 100% of Aldi’s eggs, bread, fresh meat and fresh poultry products are Australian made, 93% of Aldi’s fresh dairy products are Australian made, [and] 91% of Aldi’s fresh fruit and vegetables are Australian grown,” the spokesperson says.
In his book, Knox claims Aldi’s rapid expansion in Australia has been driven by the retailer “appealing to the same lowest-price, bargain hunting instinct that has served Coles and Woolworths so well; but Aldi has taken that appeal further”.
“In a sense, Aldi is a product and beneficiary of the ‘Down, Down culture,” Knox says in reference to the well-known Coles low-price promotional campaign.
But the Aldi spokesperson says, while the discount retailer “will not be beaten on price”, it also prioritises customer service.
“We have been consistently recognised for delivering high levels of customer satisfaction,” the spokesperson says.
“Aldi recently received the Canstar Blue’s Most Satisfied Customers award for Supermarkets in 2015 for the fourth time in five years. We were also named ‘Supermarket of the Year’ by Roy Morgan Research for the third time in four years.”
Aldi has previously defended itself against claims it does not pay its fair share of tax in Australia, a charge levelled at numerous large, multinational corporations but one that has been difficult to prove as Aldi operates in Australia as a limited partnership and therefore is not required to submit financial accounts to the Australian Securities and Investments Commission.
Aldi’s spokesperson told SmartCompany Aldi was established as an independent operation in Australia and “all of our profits are reinvested back into our Australian business”.
“Since 2001, we have invested $3.7 billion in capital expenditure in the Australian economy,” the spokesperson says.
“Our South and Western Australian expansion plans have an associated investment of over $700 million, which will culminate in as many as 120 new Aldi stores and over 2000 new jobs for those states.”
“Aldi already enjoys strong, long lasting relationships with suppliers in South and Western Australia. Our planned expansion into these states will result in increased volumes for existing suppliers, as well as more opportunities for other local suppliers to partner with us.”
The relationship Aldi has with local suppliers is a key area the spokesperson sought to highlight in response to the claims contained in Knox’s book.
“Over the course of the year, Aldi engages with more than 1000 suppliers, the majority of whom are Australian and have enjoyed growth and success as we have expanded,” the spokesperson says.
Aldi is one of four retailers to have signed on to the federal government’s Food and Grocery Code of Conduct and the spokesperson says this is further evidence of its commitment to local suppliers.
“As we have always been committed to sourcing and working with Australian partners, it is in our interest as a growing organisation to continue buying locally to maintain the sustainability of the industries that support our organisation,” the spokesperson says.