Foodservice Solutions® 5 P’s of Food Marketing have price as a key element, price it is not the lone component however. Aldi a global power house disruptor within grocery retail has begun testing another key element within the 5 P’s of Food Marketing portability.
Aldi’s move to test online grocery in the UK shows why they are an industry disruptor. Given the fact that they are the fastest growing grocer in the United States, and a very successful discounter that's rapidly gaining market share, they are not standing still.
Grocery industry research icon Bill Bishop stated, “Aldi has also shown it’s willing to compromise some of the efficiencies of its ultra-low cost business model to drive stronger sales growth, and it's already started selling liquor online in Australia. If these ecommerce tests lead to a roll-out, Aldi is likely to use this new channel to win the big incremental sales increases that go with being first in the market.” Here are some of the success clues Bishop found while looking at Aldi:
Aldi has some operating advantages, if they pick online orders in their stores.
- The tightly edited assortment gives customers the opportunity to meet most of their grocery shopping needs.
- Smaller stores allow for faster picking of orders.
- The double-your-money-back guarantee gives customers a reason to trust Aldi to select their grocery items.
- Aldi’s digital communications (website and app) already exist and given them a digital presence.
How they decide to fulfill online orders may turn out to be a limiting factor.
- In-store pickup doesn’t offer significant time savings, because shoppers can already get in, shop and get out fast; however, skipping the “shopping experience” may be attractive to some.
- With such a small format, there’s not much space to hold orders and process transactions.
- Delivery (plus fees) needs to generate enough gross profit dollars to offset the cost of getting the product to the customer’s home, and given Aldi’s low margins and relatively low delivery densities this won’t be easy.
Aldi could use online shopping to give many more households access to their exceptionally low prices – and create lower cost fulfillment options by offering subscriptions (which would also accelerate same-store sales further).
It’s true all legacy grocery retailers are looking at On-line shopping but how many are as serious as Aldi? How many are focusing on the evolving customer first? Is your brand capitulating market share to Aldi?
www.FoodserviceSolutions.us specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a brand leveraging integration strategy. Foodservice Solutions of Tacoma WA is the global leader in the Grocerant niche since 1991 Contact: Steve@FoodserviceSolutions.us