Speed, convenience and accessibility are key focal points of the design, with simple store navigation, self-checkouts and extended opening hours (7am-9am weekdays; 8am-8pm weekends) to cater to the city shopper.
The Corner Store is powered by renewable electricity and its new range of convenience food products are packaged in recyclable packaging.
While an Aldi Australia spokesperson was hesitant to drive interest in the opening due to the Sydney lockdown, they said it’s a “first of its kind” store.
“We are fortunate that as an essential service we are open for trade, and in these challenging times feel it is our responsibility to ensure North Sydney locals have access to the re-opened store to make their essential grocery purchases as needed,” the spokesperson said.
Growth in localism
Australian retail expert and QUT professor of marketing Gary Mortimer believes that while local stores have shown promise throughout the pandemic, location is critical to success.
“Towards the end of 2020, we saw a growth in localism, people working from home, staying home and shopping local. It’s timely that they’ve rolled this out now,” he told Inside Retail.
“I think they are hoping to capitalise on those high density in-the-city areas. The challenge is CBDs will not return to pre-COVID levels for many years. The market leaders have worked out pretty quickly that [rolling out smaller store formats] may not be a successful strategy if we have continuing lockdowns.”
A study by Deloitte Access Economics estimates that it will be late 2024 or early 2025 before economic activity in Sydney and Melbourne CBDs returns to 2019 levels.
Last month, Woolworths announced a $50 million write-down on the value of its smaller-format Metro supermarkets, flagging 13 struggling locations. Three of the 13 stores closed and Woolwoths is reviewing the remaining 10 sites.
Woolworths Group CEO, Brad Banducci, said the Group remains committed to its Metro Food Stores but that reduced footfall had impacted some locations.
“The changing customer work and shopping patterns we have seen over the last 15 months have negatively impacted some of our stores, particularly in CBD and transit locations,” he said.
However, Banducci stressed that stores in suburban areas not impacted by a reduction in foot traffic continue to perform well.
As Mortimer points out, the smaller-format store has been proven to work.
“They’re cheaper to implement than a big box retail store or supermarket. They’re easier to maintain, cheaper to run and they meet that convenience-seeking customer,” he said.
The move comes as the retailer sets its sights on advancing automation in the business with plans to open three new distribution centres on the east coast.
Aldi is currently consulting with teams about these plans which are expected to begin impacting business operations by around 2025.
It’s the latest signal that the business is falling in line with the tech-focused strategies followed by other major grocery retailers. Last month, Aldi introduced self-checkouts at its Darlinghurst store in Sydney as part of a wider trial. The retailer also recently began selling the first of its products online, through its e-commerce platform.
“Aldi has, for a long time, been an innovator in the market, and the big supermarkets followed [its lead] on Special Buys and things like that. But recently, it seems that they’re shifting focus to becoming a bit of a market follower and adopting that follower strategy where they are starting to replicate some of the strategies that big supermarkets are putting in place,” Mortimer said.
Local concept grows in the UK
But Australia isn’t the first market to welcome smaller format Aldi stores. In 2019, Aldi introduced its “Local” concept to the UK, starting on Balham High Road in South London.
An Aldi UK spokesperson told Retail Gazette at the time that it was the trial of a new brand identity “to help shoppers distinguish between its smaller city stores in London and the conventional-sized Aldis”.
While smaller in size, the UK Local stores are still twice the size of a typical convenience store at 6000sq ft. The streamlined range, with 300 fewer products than a regular-sized Aldi, is focused on ‘grab and go’ items.
“The main difference is that it doesn’t sell bulkier items that shoppers would have difficulty transporting without a car,” the spokesperson said.
Cada, the design team behind the Local concept said it has been developed for “busy city centre customers shopping frequently and on foot for small quantities of convenience items”.
“The concept needed to follow the design direction of larger Aldi UK stores, also designed by our team, ensuring that the company’s core values and messaging around product quality, product freshness and low price were consistently applied in the shift to a smaller format,” Cada said of the concept.
Back to its roots
The move by Aldi is perhaps not surprising, given the origins of the supermarket chain can be traced back to a tiny shop in a suburb of the German city of Essen.
Brothers Karl and Theo Albrecht reportedly inherited the store from their mother in 1946, in the aftermath of World War II. According to CNBC, both brothers were conscripted to fight for Nazi Germany during the war.
After returning home, they set about establishing a no-frills discount store selling only non-perishable items at low prices.
“The brothers refused to spend money on advertising or in-store decorations, and they ruthlessly removed poor-selling items from their inventory,” CNBC reported.
With the economy on its knees following the war, consumers turned to the low prices model, and by 1955 the chain had more than 100 stores throughout Germany.