Aldi has surprised the market with plans to launch an online business in the UK but it’s a shrewd and tactical move, according to a leading retail and shopper marketing agency.
Catherine Shuttleworth, CEO of Savvy Marketing, said: Few would have been surprised to see Aldi’s strong set of trading results for 2014, published earlier today [Aldi reported a 31% rise in sales to £6.9bn in 2014]. The retailer’s market share performance has been phenomenal and its store opening programme has allowed it to reach new shoppers up and down the country [Aldi operates 598 stores and plans to open 65 new stores this year].
“What was less expected was the retailer’s announcement that it is to launch an online business next year, starting with wine and then non-food. Some might argue that such a venture could be a distraction from an existing business model which is currently firing on all cylinders, but we see this as a shrewd move.”
According to Savvy, the online push gives the retailer national coverage resulting in access to underserved regions and the ability to introduce the brand to new shoppers.
Shuttleworth said Aldi was also wise to start with wine and non-food – categories which will be less margin dilutive than a full grocery home delivery service.
“Wine has served an effective category to draw in new, particularly lucrative more affluent shoppers, to try their stores,” she said. “Its eclectic range of non-food products has been a staple footfall driver for Aldi for many years, and we believe it can attract online traffic too.
“At a practical level, both wine and non-food can be run independently from its existing core supply chain. This will minimise complexity and prevent potential distractions from a core business which still has substantial scope for further growth.”
Shuttleworth said Aldi continues to demonstrate an instinctive connection with the mood of the nation and is ideally positioned to serve the changing UK shopper. “Its move online, we believe, is another reason why the retailer will continue to outpace the market over the next five-10 years,” she said.
Paul Thomas, consultant, Retail Remedy retail consultants, agreed. “A smaller range makes Aldi relevant in the convenience grocery market as well as the core supermarket sector. The discount retailer has hit a sweet spot in grocery that is eluding the majority of its competitors,” he said.
“Aldi’s marketing is memorable, simple, relevant and true to the retailer’s strategy. However, there is the possibility to stretch that strategy and pull the customer further than they are willing or able to. Aldi can still be innovative but true to its core proposition.
“Aldi is shaking up the grocery sector again with its move into e-commerce. Competitors will be worried as operating online profitably is less of a priority for the owners of Aldi,” said Thomas.