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Last month the internet lit up with photos of Australians wearing a colourful new range of hoodies, track pants, slides and beanies. They weren’t from a hot streetwear brand or a cutting-edge fashion label, but rather a German supermarket chain.
In a photo posted in a Facebook fan group with 79,000 Australian members, one woman poses in her Aldi hoodie, standing underneath the supermarket’s bright yellow sign. In global fan groups with memberships as large as 2.8 million, many shared photos of their dogs wearing pooch-sized Aldi jumpers; others resold their purchases at inflated prices in dedicated Aldi buy-swap-sell groups. One fan posted a photo of her haul: an Aldi-branded umbrella, beanie, socks, sweatshirt and more. “My family thinks I’m crazy,” she wrote. “But I know you’ll support me!”
It’s hard to imagine anyone proudly sporting a Coles or Woolworths jumper. But at a time when trust in our supermarkets is dwindling, Aldi has maintained a unique cult following in Australia.
Debbie Berger, a Brisbane member of one of the Aldi fan groups on Facebook, says she was converted to the supermarket chain after moving in with her partner, a 55-year-old truckie who “would marry Aldi” if he could. Now she enjoys scouring her local store’s famed middle aisle, where she has picked up everything from a bike seat to a lemon tree. The prices are, she says, “much cheaper” than elsewhere. But there’s another reason she keeps going back – it’s just a less overwhelming place to do your groceries.
“You go there and need dried apricots, there’s just one packet of dried apricots,” Berger says. “You don’t need to look at 10 different brands and decide.”
Fellow Aldi fan Angela Murray-Gilbert, also from Brisbane, agrees that in addition to the savings, it’s quicker to get her groceries done at Aldi. Friends and family call her “Queen Aldi” for her deep love of the supermarket.
“I do feel like Aldi speaks to me because I can say I need something and within the next two catalogues, that is their special buy. It may not be an act of God, but it gives us something to giggle about,” she says.
Aldi’s success is measurable by several metrics: since entering the Australian market in 2001 with two Sydney stores, the chain has grown to almost 600 locations in every state and territory bar Tasmania and the Northern Territory. It has been named Canstar Blue’s most trusted Australian grocery brand for six years running and Roy Morgan’s supermarket of the year for the last four, and has pipped IGA to become the grocery retailer with the third-largest market share. It regularly tops consumer advocacy group Choice’s supermarket product comparisons, and scores favourably in Guardian Australia’s own.
Even if you’ve never shopped at Aldi yourself, you’ve likely still benefited from it. Jason Murphy, an economist who writes regularly about supermarkets, says the arrival of the German grocer prompted Coles and Woolworths to start battling over price and shore up their image on affordability. And as a multinational corporation, Aldi is a competitor that can’t be bought out by the Australian grocery giants – unlike Bi-Lo and Franklins, which were bought by Coles and Metcash respectively.
So how did Aldi get so big in Australia?
“We’ve definitely found that Aldi consistently comes out on top for value,” says Pru Engel from consumer advocacy group Choice, which regularly compares Australian supermarket products. Engel says Aldi also often scores higher than competitors in quality of packaged food products and cleaning supplies. “So not only are they cheaper, they’re good performers as well.”
There are some caveats to Choice’s advice. The TVs sometimes sold by Aldi “consistently received really average scores”, Engel says, and the branded products stocked by Aldi, such as Nutella or Vegemite, are not necessarily cheaper than at Coles or Woolworths.
How Aldi manages to offer lower prices is all part of its business plan. Key to the cheaper shop is that a reported 90% of Aldi’s stock is its own branded products, which are “always much cheaper for supermarkets”, says Louise Grimmer, a senior lecturer at the University of Tasmania who specialises in retail marketing.
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Those products are less costly to sell simply because there’s no need to spend money advertising them – a big line item in the production of, say, Coca-Cola. And creating great-tasting own-brand products is a clever way to keep shoppers coming back to Aldi, Grimmer adds. “If you can get customers to really like your home brand Aldi coffee, that’s the only place you can get that product. So … customers become loyal to you,” she says.
Shoppers might not necessarily realise that most of the products in store are made by Aldi. They’re typically given brand names, and the packaging might resemble popular local brands – Aldi might sell a packet of flour that looks a lot like White Wings, for instance, but call it White Mill.
Murphy says beyond its own-brand products, the chain is also cheaper because “they run a much tighter ship” than the big two.
“It’s just a really small footprint shop and they stock way fewer items – they have like 1,500 different things in the shop instead of 15,000. So that reduces complexity in their operations and in the amount of warehouse space they need. And they’ve got a global supply chain as well, which really helps – they’re selling similar things in Aldis all over the world,” Murphy says.
Anyone who remembers the Australian farmers who got screwed in the Coles and Woolworths battle over dollar milk might wonder if there’s someone else down the supply chain paying the true price for Aldi’s bargain groceries. But Murphy says that as far as he knows, the chain’s low prices do not come at anyone’s expense.
“Rather than doing spot pricing and buying things at variable prices that make life difficult for their suppliers, they sign these long-term contracts and they try to really build a good relationship. And you’ll often hear suppliers talking about how much nicer it is to work for Aldi than for the big two,” Murphy says.
Then there’s the middle aisle. Those idiosyncratic special buys, Grimmer says, are “a really clever idea to get people coming into the store each week” and another huge puzzle piece in the story of Aldi’s success. Stock is different every week, availability is limited, and part of the fun is “treasure hunting and finding a bargain”.
Grimmer notes that not every shopper loves Aldi. Some find the prospect of doing their groceries next to piles of discounted camping gear or luggage “not a particularly appealing prospect”; others don’t “equate Aldi with really fresh fruit and vegetables”.
“A lot of people like their nationally branded products, and say Aldi just don’t have the range that I’m looking for in terms of sort of the breadth and depth of different product categories,” she adds. “I think you either love or hate Aldi, don’t you? There’s no in-between.”
But for those who do love it, Grimmer believes another factor in Aldi’s success in Australia is that compared with the rest of the world, “we have really boring supermarkets”. The UK has Sainsbury’s, Waitrose, Tesco and Morrisons, as well as the discount Germain chain. The US has Trader Joe’s, Whole Foods Market and HEB, among a laundry list of others. But Australia’s grocery landscape is dominated by Coles and Woolworths, “which are just carbon copies of each other”, she says. And we’re desperate for something – anything – else.
“If it wasn’t Aldi, it might have been another brand. And they may well have been as popular as well, just because they’re a third choice,” Grimmer says. “We just don’t have a lot of choice here in Australia.”