Why ALDI’s Rise And Rise Is Bad News For Agencies

Why ALDI’s Rise And Rise Is Bad News For Agencies
SHARE
THIS



A new report has shown that ALDI’s rise in Australia will continue to squeeze the margins of the big two – Coles and Woolies – having a flow-on effect to ad spends, not just for the grocers but their suppliers too.

The report out today by ratings agency Moody’s says ALDI’s aggressive expansion in Australia has come at the expense of independent grocers and the big two’s duopoly is under serious threat.

The grocery business is worth $88 billion in Australia and the German budget retailer is clearly keen on taking a bigger slice of the action. ALDI reportedly enjoyed three times the growth of its Australian competitors in 2014 and the report predicted the budget grocer would take $250 million of business from each of its competitors – the big two and independents – by 2020.

Moody’s, using overseas comparisons where ALDI had gained a significant foothold, said Coles and Woolies would have to expect “market share and margins to come under pressure”.

In good news for shoppers, the report said any war between the three would result in cheaper prices, but in bad news for agencies, the report believed Coles and Woolies marketing strategy would increasingly be around building new stores to protect their respective patches while heavily discounting prices.

One industry boss who recently spoke to B&T anonymously said the squeeze on margins was already having an adverse effect on ad spends across all FMCG clients.

“It’s bad for all the suppliers and therefore all the vertically integrated suppliers that supply to the suppliers and it’s fucking our industry and it’s going to screw a lot of brands and businesses,” he moaned.

“Coles like to see themselves as the consumer’s fighter, fighting for low prices and that is coming at a cost of squeezing its suppliers and driving the entire profit and margin out of a lot of companies. Woolies has followed suit and it’s proven successful for customers.

“But the reality is Aldi’s business model, with its unbranded product, allows them to provide even cheaper products again. I think the top two are being beaten at their own game and the only winner here is probably Aldi,” he said

BMF – ALDI’s agency in Australia – was contacted for comment for this story.

Please login with linkedin to comment

Advertising Standards Bureau Jamie Oliver Thinktank Social UM Melbourne

Latest News

Verizon Media Academy Ends For 2021 With Youth Charity Pitch-Off
  • Advertising
  • Media

Verizon Media Academy Ends For 2021 With Youth Charity Pitch-Off

Verizon Media’s talent program has come to an end for the third year, closing with a hybrid pitch-off event for Musicians Making A Difference (MMAD). The Verizon Media Academy class of 2021, made up of 44 emerging leaders from across Australia and New Zealand media, advertising and marketing industry, were given just one hour to […]

Industry’s Gamers Unite For UnLtd’s Virtual Rocket League Comp
  • Advertising
  • Marketing
  • Media

Industry’s Gamers Unite For UnLtd’s Virtual Rocket League Comp

Social purpose organisation UnLtd’s Big Games competition has raised a combined $85,000 for children and young people at risk. Running over five weeks, the competition involved 32 teams from across the advertising, marketing and media industries battling it out virtually for a chance to qualify for the Rocket League final. The tournament culminated in a […]

Sam Worthington And Phoebe Tonkin To Star In New Stan Original Film ‘Transfusion’
  • Media

Sam Worthington And Phoebe Tonkin To Star In New Stan Original Film ‘Transfusion’

Stan has announced that the Stan Original Film Transfusion commenced filming in Sydney earlier this week and will premiere on Stan in 2022. Transfusion is a taut, muscular thriller starring Sam Worthington (Avatar) as Ryan Logan, a former Special Forces operative, who is battling to cope with life after the loss of his wife and is thrust […]

COVID-19 Saw Stock Imagery Return To Harmful Gender Stereotypes
  • Advertising
  • Marketing

COVID-19 Saw Stock Imagery Return To Harmful Gender Stereotypes

According to a decade of data collected by iStock, Australian brands turned to imagery depicting outdated gender stereotypes during the pandemic. Tracking the keyword ‘women’, iStock by Getty Images found that in 2020, ANZ brands and businesses reverted to gender stereotypes. Images of mothers home-schooling were used at almost twice the rate of images of […]

by B&T Magazine

B&T Magazine
Maddison Connaughton Ends Time As Editor Of The Saturday Paper
  • Media

Maddison Connaughton Ends Time As Editor Of The Saturday Paper

Schwartz Media is congratulating Maddison Connaughton on her three years as editor of The Saturday Paper. Connaughton has decided to finish up her editorship this month. “It’s been an honour to edit the paper,” Connaughton said. “The Saturday Paper is one of the brightest voices in Australian media and I have been happy to see […]

Teenage boy wearing headphones works at desk in his bedroom
  • Media

New Research Names Olivia Rodrigo And BTS The Most Popular Study Music

Research from EdBbirdie using Spotify data has identified the most popular songs to study to. After analysing thousands of studying and homework playlists on Spotify, American singer Olivia Rodrigo’s ‘drivers license’ came out as top song to study to. It featured on 48 study playlists, while other top songs included ‘Ophelia’ by The Lumineers, ‘Falling’ […]

Happy woman drinking tea and waving to someone while having video call over desktop PC in the evening at home.
  • Marketing
  • Opinion

Building A Successful Remote Marketing Team

Dayna Stewart is the Business Director – Digital Marketing, Media & Creative Services at The Nudge Group. Here, she discusses the challenges that come with building a successful marketing team when working remotely. Before COVID-19 changed the way businesses work, most marketing teams spent their days together in a meeting room collaborating on the next […]

Opinion

by B&T Magazine

B&T Magazine
Australia’s The Kid LAROI Joins Billie Eilish, Dua Lipa, Olivia Rodrigo And More In iHeartRadio Festival Line-Up
  • Media

Australia’s The Kid LAROI Joins Billie Eilish, Dua Lipa, Olivia Rodrigo And More In iHeartRadio Festival Line-Up

The line-up for the 2021 iHeartRadio Music Festival has been announced as the legendary event returns live in Las Vegas in September. This year, the epic two-day lineup for the iHeartRadio Music Festival main stage will feature performances by Billie Eilish, Cheap Trick, Coldplay, Dua Lipa, Florida Georgia Line, Journey, Khalid, Lil Baby, Maroon 5, Nelly, […]