Could this move from Aldi present a big challenge to Kmart and homewares retailers?
Wednesday, September 6, 2017/
When it comes to the broader retail market, experts say discount supermarket Aldi is always watching, and an upcoming foray into the world of homewares could bring a challenge to other retailers that are trying to cash in on customers’ affection for low-cost home goods.
Over the past few weeks the retailer has been promoting an upcoming “Style Revolution” range of homewares, which will be available from stores, including on a “Special Buys” day next week.
The “Style Your Room” offer includes a variety of simple, low-cost bedding, lamps and accessories, not dissimilar to Kmart’s vastly popular homewares range.
Aldi promises customers they can bring “upscale refinement to their home” with marble side tables, prints of New York and throw blankets, most under the $100 price tag.
Retail expert at Queensland University of Technology Gary Mortimer says Aldi has stocked homewares before, but with this move, he says it’s clear the retailer has the ability to soak up and replicate “on trend styles”.
Mortimer says Kmart has already changed customer expectations around what they should expect to afford for their homes.
“Aldi is very good at bringing in these ranges of apparel and merchandise to complement their food brands,” he says.
While in this case the retailer looks to be taking inspiration from the homewares boom in other discount department stores, Mortimer says Aldi has made similar moves in the past, expanding its ranges to match consumer trends whenever it can.
“If you have a look at what they’ve done in their new stores, they’ve expanded new gluten free ranges. They’ve expanded their health and beauty range. They are very good at looking at emerging trends and adding to their ranges,” he says.
Director of InsideOut PR Nicole Reaney says there have also been changes to Aldi’s brand position, as more affluent shoppers become interested in its sales.
“Aldi has moved its stores into higher socio-economic areas, [where customers] will be looking for and can afford higher-end products, while making purchases for everyday groceries,” Reaney says.
Impulse purchases will still play a role in the retailer’s strategy, and expanding into a sleeker homewares offering as an extension of that is also an “aligned move to the market Kmart has transitioned to”, she says.
Strategist at Retail Oasis Pippa Kulmar says the limited edition nature of Aldi products is unlikely to put a long-term dint in Kmart’s homewares sales, but it does show the game is changing for homewares and furniture in the same way it’s changing for clothing retail.
“This is a way for Aldi to generate traffic. But it polarises the market — for businesses playing in the middle, it makes it very, very hard,” she says.
Challenge thrown down to SMEs in homewares space
Aldi’s move into simple homewares shows there are now firm lines drawn between luxury home goods and the discount retail offering, says Kulmar, leaving businesses that offer mid-market homewares to chase shoppers between the two extremes.
“If you’re sitting in the middle market, you can no longer compete on stock or price. You have to curate your offer,” she says.
Aldi is becoming a more acceptable forum for making purchases that will be displayed in the home, so with the weight of discount retailers against you, Kulmar says it’s crucial for SMEs to decide what skills they bring to customers that the bigger players don’t.
“Ask how you can move things into a more emotive purchase for customers. That’s the long-term challenge,” she says.
Mortimer says Aldi’s tendency to ride popular trends shows the retailer’s own willingness to adapt to changing interests and apply these to the business.
“They pick a trend and then they just say ‘let’s do that’,” he says.
SmartCompany contacted Aldi Australia for comment about its homewares range but did not receive a response prior to publication.