Aldi boss explains why their groceries are so much cheaper - as he takes a swipe at Coles and Woolworths
A senior Aldi executive has taken a swipe at major competitors Coles and Woolworths while revealing why the German discounter is so much cheaper.
A senior Aldi executive has taken a swipe at major competitors Coles and Woolworths while revealing why the German discounter is so much cheaper.
Jordan Lack, Aldis managing director of buying in Australia, said the chain was more focused on providing cheap prices than convenience during a cost of living crisis.
Speaking to an Australian Competition and Consumer Commission inquiry into supermarket pricing, 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 costly for Aldi, Mr Lack said.
The cost involved for the retailer, which has 600 shops and a 10 per cent market share in Australia, would cut into its position as the cheapest supermarket.
We did an assessment of online and understand that channel to be a costly channel to serve, Mr Lack told the counsel assisting the inquiry.
If you have employees picking the groceries instead of customers doing their own shopping, obviously, that is a cost that is incurred.
The senior executive said if Aldi serviced an online sales market it would have to pass the cost on to its customer, the AFR reported.
A senior Aldi executive has taken a swipe at major competitors Coles and Woolworths, while also revealing why the German discounter is so much cheaper (pictured, Aldi in Sydney)
Jordan Lack, Aldis managing director of buying in Australia, said the chain was more focused on providing cheap prices than convenience during a cost of living crisis
That was not something that we thought was reasonable for us to explore, at that point in time, in order to preserve our low-cost position in the market.
One of the way it does so is through having a very limited choice of goods, with each store carrying about 1,800 products, compared to up to a choice of 25,000 products in Woolies and Coles.
Aldi also saves costs by requiring customers to pack their own groceries, having fewer employees than its rivals, and having a large percentage of inhouse or home brands.
The supermarket is then able to pass on saved costs through lower prices.
Customers right now are definitely focusing on seeking value, and they see that as an area that we excel at, Mr Lack told the inquiry.
He did admit, though, that online shopping worked out well for some people and that it would not bring down Aldis share of Australias grocery trade.
There are another cohort of shoppers that are actually also seeking convenience, and online does provide a channel for convenience.
Current indications would suggest that we are still growing in a healthy regard and gaining market share, he told the inquiry.
