ALDI – Love Or Loathe It, But Ignore It At Your Peril

ALDI – Love Or Loathe It, But Ignore It At Your Peril
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In this opinion piece, Now Comms’ shopping expert, Kevin Moore, argues that ALDI’s rise in Australia is much like Dr Suess’s “green eggs and ham” – you may not initially warm to it but it’s going to win you over in the end…

 ALDI is growing. Everywhere it trades in the world, it’s growing. So why is ALDI growing so fast? Why is this small range, discount grocer apparently a threat to the mighty Coles and Woolworths in Australia? In fact why has ALDI, and its evil discount twin LIDL in the UK grown to almost 10% share of total UK grocery sector? Why does ALDI and its upmarket sibling Trader Joe’s grow so fast in the USA? And what does it mean to an Australian communications industry that has a huge client base not only in all the parts of Coles and Woolworths, grocery, liquor and convenience arms, but also in the CPG supplier base of brands that sells their products through these two dominant grocery, convenience and liquor retailers.

As a very young kid my parents read me stories by Dr. Seuss. The calmingly monotonous ‘Sleep Book’ did a great job of getting me to sleep (and still does if you have young kids in your life) and ‘the Cat in The Hat’ entertained me, and let me know that I could be pretty bad and still manage to get things back on track. But ‘Green Eggs and Ham’ taught me a lesson at a very early age; it taught me that you need to try new stuff, or you will be missing out.

ALDI, to many shoppers is green eggs and ham. In the book ‘Sam I am’ tries to get the narrator and star of the story (you and I) to try green eggs and ham. Sam I am reckons they taste great, even if they are an unappealing green colour. But the narrator (you and I) doesn’t believe Sam won’t try them. In fact we repeatedly and clearly say, “I do not like green eggs and ham.” But how can we know that? We haven’t even tried them.

Well less well-off people try green eggs and ham. They understand the relationship between cost and value far better than wealthy people. They were the first to buy a Honda motorcycle, a Toyota car, a Dell computer and an Android phone. With the rising cost of living, people with less money than their richer counterparts have to think more carefully about where they choose to allocate their money.

In the words of Scott Galloway – the fast talking and engaging professor at NYU-Stern Professor and star of the ‘Four Horsemen’ video on YouTube – “wealthy people all look, smell and dress the same,” (See link here:http://tinyurl.com/nkoskj8), and I would add, shop the same. They won’t allow cheap new things into their lives. I think it’s the wealthy town of Marlow in England that petitioned against the opening of an ALDI store as ALDI is ‘too cheap’ and ‘may attract the wrong kind of shoppers to the suburb’.

So what can we learn about ALDI to better understand how we can work with them, their suppliers, and understand what is important to Coles, Woolies and the Consumer Packaged Goods Sector in this new growing discount economy?

Well, ALDI has a scarily low cost base, very narrow selection, even fewer international brands, great prices, poor service, some of the least engaged store staff in Australia, long lines and gaps on shelf.  It was an early adopter of SALMAT’s Lasoo digital and mobile catalogues, and is very active in social media. In the US it adopted Electronic Shelf Labels not to lower its already low cost, but to free up store staff time to improve service via better engagement between staff and shoppers. In Trader Joe’s it also changed uniforms from drab blue to funky pastel Hawaiian shirts with lots of fresh product tastings in store. In Australia the low cost retailer is now in ‘flagship’ very high cost locations with attractive store designs like Chadstone Mall in Melbourne. ALDI branded cheese, wine, champagne and liquor win awards in blind tasting around the world. The product is cheap but very good.  More and more CPG players are supplying ALDI with specials or manufacturing ALDIs own brands. It’s nimble and flexible when it wants to be.

Over at Coles and Woolies at CXO level you can be sure that Coles and Woolworths are taking a serious interest in big data from Quantium into the Every Day Rewards and data mining from the dominant Coles and wider retailer supported Flybuys Program. There is now a huge and renewed interest in the power, scale and reach of mobile social media from Facebook, Twitter, Instagram and YouTube, not as a reactive issue resolution tool, but the core proactive awareness and engagement platform across the businesses. Google’s data and reach is also being harnessed as Coles and Woolies seek to regain ground against ALDI. And they are funding all of these investments in data and social media via diverting funding from mainstream media. Suppliers are having to lower their shelf prices to help the two grocers compete with ALDI and, insult to injury, compete with the two grocers growing retail own brand portfolio. This is lowering the overall money the CPG industry has to invest in their brands, and where they are investing it.

So why would a 28-year-old male on $100,000 salary, wearing an MJ Bale suit he bought from Myer, walk into a ALDI store after work for cheap food, on his way to drop $100 a head on tapas and good wine two hours later? Same with a 30-something mum in an ML Benz whose hubby and her spend $50,000 net a year on private school fees? Why does a struggling single mum or retiree walk into a full service Coles or Safeway store to buy expensive organic yoghurt or fair trade coffee? If you don’t know the answers you need to walk stores, watch, listen and shop. Learn that the shopper isn’t a loyal consumer of one brand. Nor the loyal customer of one retailer, but the promiscuous shopper. We shift our behaviour based upon our shopping environment. What we see, hear, touch, taste and smell. What’s offered to us right now, just before, during and just after our shop. Data, technology and mobility are just the enablers.

I walk with brand owners, CPG CEOs, business owners, creative directors, agency MDs and marketers through stores a lot. I have to drag them into ALDI stores. They’re worried some young mum with a snot nosed kid will stain their MK handbag or G-star Raw jeans.

I bring a plain plastic shopping bag for them so they don’t have to buy and carry out an ALDI bag. However, once they start to shop the stores they understand why more and more nifty shoppers are going to ALDI. They begin to understand what they need to do to harness their brands for ALDI shoppers and differentiate their brand for Coles and Woolies shoppers. They start to think like a shopper and align with each retailer to offer shoppers the things each shopper wants from that store any time they visit it.

What are the big ‘so whats’ for our advertising and communications industry? Well number 1 is this: you need to walk stores and understand the shopper.  Number 2: you need to understand, love and play in data. And number 3: you need to understand, love and live in all things mobile and digital. Age is no excuse. If you are not a sub 26-year-old digital native, you need to be a digital immigrant. By your choice of job in the communications industry you chose to be here. Learn the language and practice your pronunciation.

Sam I am, like the Albrecht family who own ALDI, is patient and tenacious. Over the course of the story he stays with the narrator (you and I) wherever we go. On boats and trains in the pages of the book, but mobile and digitally in our connected world that Dr. Zeuss wouldn’t recognise. Eventually Sam wears us down and we begrudgingly try the green eggs with the ham. And guess what? It appears that Sam was right all along. They do taste great, even if they are an unappealing green colour.

“That Sam I am, that Sam I am I do so like that Sam I am. I do so like green eggs and ham.”

Visit stores. People shop there.

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