A senior Aldi executive has hit out at its main competitors Coles and Woolworths and revealed why the German discounter is so much cheaper.
Jordan Lack, Aldi’s general purchasing manager in Australia, said the chain was more focused on offering cheap prices than convenience during a cost of living crisis.
Speaking to an Australian Competition and Consumer Commission inquiry into supermarket prices, he explained why Aldi did not have online shopping.
While Woolworths and Coles offer customers home delivery and click and collect services, it would be too expensive for Aldi, Lack said.
The cost involved for the retailer, which has 600 stores and a 10 per cent market share in Australia, would hit its position as the cheapest supermarket.
“We did an assessment of the online channel and we understand that channel is expensive to service,” Mr Lack told counsel assisting the investigation.
“If you have employees picking up the food instead of having customers do their own shopping, obviously there is a cost incurred.”
The senior executive said that if Aldi served an online sales market it would have to pass the cost on to its customer, the AFR reported.
A senior Aldi executive has attacked major competitors Coles and Woolworths, while also revealing why the German discounter is so much cheaper (pictured, Aldi in Sydney).
Jordan Lack, Aldi’s general purchasing manager in Australia, said the chain was more focused on offering cheap prices than convenience during a cost of living crisis.
“That was not something we thought was reasonable to explore at the time to preserve our low-cost position in the market.”
Aldi’s goal is to be 15 to 25 per cent cheaper than its main rivals Coles and Woolworths, which together control 65 per cent of Australia’s supermarket business.
One way to do this is through a very limited selection of products: each store offers around 1,800 products, compared to a selection of up to 25,000 products at Woolies and Coles.
Aldi also saves costs by requiring customers to pack their own food, having fewer employees than its rivals, and having a large percentage of in-house or “homemade” brands.
In this way, the supermarket can pass on the saved costs through lower prices.
“Right now clients are definitely focusing on looking for value and see it as an area where we excel,” Mr Lack told the inquiry.
However, he admitted online shopping worked well for some people and he would not reduce Aldi’s share of Australia’s grocery trade.
“There’s another group of shoppers who are actually also looking for convenience, and online provides a channel for convenience.”
“Current indications suggest that we are still growing healthily and gaining market share,” he said in the research.