Good. Different? Aldi follows rivals on self-service and e-commerce

A gradual transition in grocery shopping behaviour in recent years from a weekly “big shop” to smaller and more frequent trips has compounded the need for speedier checkout. 

“We anticipate the trial will appeal to our regulars as well as attract new customers, who are purchasing only a few items at a time – and we’ll also be introducing Aldi baskets in all trial stores to aid these small and quick shops,” Eichfeld said.

While Aldi did not say whether the trial will involve the complete removal of the traditional checkout option, the retailer stated that employees will be required to “assist, support and monitor customers’ use of self-checkouts and assist with any issues, rather than working on the register”. Aldi also said that staff will have more time to focus on “creating a quality experience” by maintaining stock levels and keeping the store clean.

Australian retail expert and QUT professor of marketing Gary Mortimer expects the move will receive a positive response from consumers. 

“They clearly recognise a need to give consumers choices. Recent research indicates that 90 per cent of customers expect to have some level of choice in how they transact their purchases in stores,” he said. 

Mortimer said it’s also a very strategic way to mitigate some of the criticisms about Aldi’s existing checkouts without increasing staffing costs. 

“Despite being a very good, low cost food retailer, often consumers are vocal about the limited checkouts that are available and the consistent lines that they encounter, so this mitigates that and enables them to increase transaction points without increasing staff.”

Should the technology continue to be well received, Aldi said there’s potential to expand the rollout to more stores nationally.

“I suspect they’ll initially roll out to those inner cities or urbanised stores with low basket size and high foot traffic, and that will satisfy customers. I suspect they’ll progress that across their fleet of stores in the coming years,” Mortimer said. 

Quiet observer

Eichfeld said Aldi has been watching the uptake of self-service checkouts “with keen interest” over the years and monitoring the convenience, value and efficiencies they drive for business.

“We are not first to market with our self-checkout offering, rather we are well known for taking our time to make carefully considered business decisions to ensure we never compromise on our low-cost business model. This allows us to consistently provide our customers with high quality groceries at incredibly low prices,” Eichfeld said. 

By adopting this “follower strategy” as Mortimer calls it, Aldi can avoid some of the common pitfalls that others have encountered.

“They are a little late to the party but, in doing so, they are able to look at all the challenges and problems that Coles and Woolworths encountered in the implementation of these types of technologies, particularly around store theft. Also the asset costs are now fundamentally cheaper today than they were 20 years ago,” Mortimer said. 

Aldi’s first steps in e-comm

Aldi’s move into self-service checkouts isn’t the only sign that the retailer is embracing digital transactions. In recent weeks, Aldi Australia launched its very first products online through shop.aldi.com.au.

The online exclusives are high-value Special Buys items, a latex mattress for $499 and a french-door refrigerator for $879, and are available to customers in greater metro regions of Queensland, New South Wales and Victoria.

The online shop will serve up new additions to the online store at 8:30am on Wednesdays and Saturdays in line with the Special Buys promotion in-store. A rolling tool chest, USB condenser microphone and an auto shredder are among the upcoming items being promoted on the site. 

Aldi said the online shop wil trial a range of products including “bulky items, like the mattress and the fridge, to high value and every day Special Buys”.

“We are constantly looking for ways to improve the experience for our customers and are very excited to be taking our first steps into eCommerce. Our limited initial online offer allows us to set the foundations for our future program,” Simon Padovani, Aldi Australia group director customer interactions, said in a blog post. 

Mortimer said it’s a smart move to focus on higher value Special Buys that people could not easily pick up from a store, however he warns that the retailer will need to keep its offer differentiated from Coles and Woolworths to continue its growth in the market. 

“The overall challenge strategically for Aldi is that it has clearly positioned itself as being ‘good’ and ‘different’, and it’s grown in the market under that tagline. By moving online, moving to self-service checkouts, suddenly they remain good but maybe not so different from the majors,” he said. 

Should there be a strong uptake in online Special Buys, Mortimer says the retailer could risk losing some of the frenzy and buzz around the promotion.

“They could lose that excitement and theatre that’s created on those Special Buys days with the big lines out the front. We saw Myer fall into the same trap by offering Boxing Day sales, online and suddenly all the lines are gone. Nobody’s rushing to get there anymore.”

Managing costs

Of course, operating an online channel brings with it heavy costs. Given the retailer’s business model is based on being low cost, it could struggle to strike the right balance financially. Mortimer suspects this is why the retailer has been so hesitant to take the plunge. 

“Offering an online channel is not as simple as flicking a switch. It changes the distribution model from distribution centres to stores and then individual’s homes. Logistics costs increase, handling costs increase, even the layout and design of distribution centres need to change if they’re doing it centrally; if they’re going to do online decentrally, from the store, costs also increase substantially,” he said. 

Delivery costs for Aldi’s current online items vary greatly depending on the product. The cost of delivering the refrigerator, for example, is $99.99, while the cost of delivering the mattress is $19.99.

“If they outsource delivery and distribution to a third party and pass that cost on to consumers, then yes, they can viably operate online, particularly their higher priced Special Buys,” Mortimer said. 

Aldi plans to extend the e-commerce offer over time based on customer feedback, but said there are “currently no immediate plans for online groceries”.

In the UK, Aldi’s online offer extends beyond Special Buys to include garden, furniture, home essentials, skincare, coffee, alcohol and more. While groceries can be viewed on the site, customers are directed to purchase in store. 

Mortimer expects Aldi will need to keep groceries in-store only to manage costs. 

“I don’t think they’re going to go down the path of doing foods like Coles and Woolworths, because they just don’t have the scale to do it at a low cost. It can’t be low cost and also have that channel without either passing those costs on to consumers or establishing a fairly high tech fee and delivery fee,” he said. 

Aldi Australia has not responded to requests for additional comment.