Marketing Strategies of Aldi Australia

This report analyses the current marketing strategies of Aldi and its impact on the performance of the company. The report also includes that company should adopt several marketing strategies for future growth and development in the Australian market such as focusing on fresh food products, providing more benefits and offers to customers, and focuses on establishing a good relationship with farmers for receiving fresh food products.

Running Head: Aldi Australia
Aldi Australia
Report
System04104
9/13/2019

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Executive Summary
Aldi Inc. is German company that operates its business in retail sector in more than 20
countries. The company is known for its aggressive marketing strategies and penetration
pricing strategy. The objective focuses on providing superior quality products on possible
low prices to every people in Australia. However, the company has still 11.4% market share
of total Australian retail market in grocery and fresh food products (Aldi, 2019). Although,
Aldi is giving strong competition to the other two giants of the Australian retail market
Woolworths and Coles. They are facing extreme pressure of tough competition because of
aggressive marketing and pricing strategies of Aldi. This report analyses the current
marketing strategies of Aldi and its impact on the performance of the company. The report
also includes that company should adopt several marketing strategies for future growth and
development in the Australian market such as focusing on fresh food products, providing
more benefits and offers to customers, and focuses on establishing a good relationship with
farmers for receiving fresh food products.

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Table of Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Company’s Background.............................................................................................................3
Marketing Analysis of Aldi Australia........................................................................................3
Marketing Strategies of Aldi in Australia..............................................................................3
Changing Strategies of Aldi since it launched....................................................................4
Competitors of Aldi in Australia........................................................................................4
Strategic Marketing Options for Aldi for Moving Forward in Australian Retail Market......5
Future Marketing Strategies in Australia............................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7
Appendix....................................................................................................................................9

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Introduction
Aldi Inc. is a German retail company and it is the third largest retail organisation in
Australia retail market after Woolworth and Coles. The organisation is famous for its unique
and innovative marketing strategies that help it to establish as a market third largest retail
company in Australian grocery and fresh food industry. The purpose of this report is to
analyse the current marketing strategies of Aldi and its situation in the Australian retail
market among its competitors. The report helps to study why Aldi required new strategies for
future growth and development in the Australian retail market. The report also analyses the
marketing strategies of Aldi that helps the company to avoid the oligopoly situation between
the Woolworths’s and Coles in the Australian market. The report also encompasses various
theories, models, and statistical information in relevant to the Aldi’s ability to continuous
growth and profitability in Australian sector.
Company’s Background
Aldi Inc. is a popular name in the German retail sector but it operates its business
internationally. The company offers 1390 to 1800 core range products and other grocery and
household products (Aldi, 2019). The company was founded in 1946 in Germany by two
German families. The company has more than 10000 stores in 20 countries including China,
Australia, Austria, New Zealand, and UK etc. (Aldi, 2019). The company is known for its
cheap and best products and it also sells the products under the private level brands. The
private label brands of the company are the heart of core product range of the company. The
private labelling strategy of Aldi allows it to offer quality products at the low cost. This
strategy of Aldi also it to dominate in the international market over its competitors including
Australian retail market (Aldi, 2019). The mission of the company is to “provide high quality
products at very low prices.” The vision of the company is “All people, wherever they live
have opportunities to buy great quality grocery and household products at lowest possible
price” (Aldi, 2019).
Marketing Analysis of Aldi Australia
Aldi entered in Australia in 2001 with the strategy with the strategy of charging low prices
for its fresh grocery and household products. After this, the company now focuses on

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expanding its marketing strategies with introducing some new products and services. The
focus of Aldi on fresh food market was the real concern for its competitors. The company
adopted the new strategy and increased its market share in both grocery and fresh food.
Marketing Strategies of Aldi in Australia
The main strategy of Aldi is to provide superior and fresh products on very low prices
in compare to its competitors. This strategy helps the company to compete with its other
competitors in the Australian retail market (Cameron, Sayers, Sacks, & Thornton, 2015).
Apart from this, the company focuses on its own labelling on the products that provide it a
freedom of manipulating the prices in the market. The price manipulation strategy of the
company gives an edge to the Aldi to change the prices according to the customer needs
(Ellickson, 2016). The Aldi Inc. uses the penetration pricing strategy where the company first
charge low prices for the quality products and once the demand hikes the company decrease
the prices of the same product in the market (Retail World, 2019).
Changing Strategies of Aldi since it launched
Aldi entered in Australia in 2001 with the strategy with the strategy of charging low
prices for its fresh grocery and household products. Although, the Accounting firm PwC has
presented a report about Aldi that Aldi has contributed $23 billion during the period of
business in Australia while its customers save more than $2.2 billion in compare with those
who shopping in Coles and Woolworths (Roy Morgans, 2018). These stats shows the
domination of Aldi in the Australian market with the low pricing strategy and self-labelling
strategy on the products that enables the company to determine low prices and manipulate the
market price of same products (Xu & Lee, 2019).
After this, the company now focuses on expanding its marketing strategies with
introducing some new products and services. The company also adopted aggressive cuts in
the prices and invest millions of dollars in its stores to attract the customers. The strategy of
Aldi to cut aggressively in the price of products helps the company to provide cheap products
customers (Jie & Gengatharen, 2019). Apart from this, the company also displays its grocery
products items on its online channels where people can see the products they want to buy and
then they can directly buy it from the near stores. That will save both time of money of
customers. The company also uses the concept of fresh food and grocery products in the
stores and it is really one of the crucial strategies of Aldi to attract customer and increase its
market share (Powell, 2019).

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The focus of Aldi on fresh food market is real concern for its competitors. The
company adopted the new strategy and increased its market share in both grocery and fresh
food. The share of Aldi in grocery and fresh food market in Australian is respectively 12.1%
and 9.0% in 2017-18(Appendix Fig. 1). Hence the maketing strategy of the company to focus
on a single segements such as fresh food helps the company to attract large number of
customers and it creates problem for the Coles and Woolworths (Merrett, 2019).
Competitors of Aldi in Australia
In compare to Aldi Woolworths and Coles has larger market share in the Australian
retail market and they both together form the duopoly. Therefore, penetration pricing strategy
of the company for the same quality products gives an edge to the Aldi over its competitors.
In 2016, Aldi shares 8.6% market share in Australia (Appendix Fig. 3). While In 2017, Aldi
share only 10.9% of total Australian grocery market in Australia but in 2018, this share is
increased in the Australian market where Aldi has 11.4% market share in Australian market
with an increase of 0.5%. However, according to the stats Aldi is still third large retail
organisation in Australian market after Woolworths (34%) and Coles (27.6%) in 2018
(Appendix Fig. 1).
The competitors of Aldi are facing extreme pressure from the Aldi in Australian
market, especially in Fresh Food market. Aldi receives the vegetables and other food
producers from the farmers directly and preserve the food in appropriate temperature and
conditions in Australia. However, the online sales facility on its mobile app gives it some
advantages over the other players in the Australian retail market (Roy Morgans, 2018). The
customer can easy found the near stores of Aldi and can order for online fresh vegetables,
food items, and grocery products (Pulker, Trapp, Scott, & Pollard, 2019). This will really
helpful for the customer to save their time and money. However, this marketing strategy is
also adopted by other giants in the market. However, the heavy discount on the products, gift
cards, and aggressive reduction on the prices of products gives an edge to Aldi over its
competitors.
Optional Strategies for Aldi to Move Forward in Australian Retail Market
The current marketing strategy of low pricing and self-brand products of Aldi attracts
customers. Apart from this, its strategy of displaying the fresh food products and grocery
products on the front door of its stores helps it to create a good image among its customers.
However, here the major problem with the company is to create the loyal customers. In

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Australia, there is clearly lack of loyalty found in Australian customers where very few
customers only shops at a single supermarket. According to a survey of Roy Morgan, 72.5%
grocery buyers buying the grocery products from Woolworths while only 8% of people
shopping in Aldi only. However, the same situation also happens with the Coles where 70%
shop but only 6.6% exclusively shop on Coles stores (Roy Morgans, 2018).
To survive in the market, Aldi must increase the number of loyal customers in the
Aldi stores. It is really a challenge for the company to retain customers for the long term and
as loyal customers. The major issue in Australian market is that all other competitors of Aldi
are practicing the same pricing strategy and self-labelling strategy in the market. Woolworth
is famous for its price manipulation because of self-labelling and branding stagey. To avoid
such situation in the market Aldi needs to focus on several marketing strategies and plans that
retain the customers as loyal customers in the organisation.
Future Marketing Strategies in Australia
The current Australian retail market needs to be more focus on the retail fresh food
market. Woolworths and Coles face strong competition from the Aldi in the Australian retail
market (O’Mahony & Lobo, 2017). However, to survive in the market and give strong
competition to these two retail giants in Australia, the Aldi need to more focused on Fresh
food segments. In grocery products, Aldi shares only 7% of total Australian market where
Woolworths share 40% and Franklins share 29% of Australian retail market of grocery
products in 2017 (Appendix Fig. 4). However, these stats are increasing in 2018 where it
reached to 12.1% in grocery products and 9% in fresh food products in 2018 (Appendix Fig.
2).
The Fresh food segment has great potential of growth in Australian retail market
where Aldi is also lacking but giving string competition to other players in the market. The
predicted or expected annual turnover in this market is more than AUD$40 billion or nearly
40% of the total grocery market (Beaton-Wells & Paul-Taylor, 2017). It has been seen that
the small retailers or non-supermarket generally operate their business in the fruits, butchers,
meats, and bread shops, but the low pricing strategy of the three retail giants reduces the
market share of small retailers from 35% to 30.0% of the fresh food market or 11.8% of total
grocery markets. However, if the Aldi will not focus on the ‘fresh food market’, it may be
possible that it will lose its market share in the future against the two great giants of the
country (Grimmer, 2019).

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The focus on fresh food products with no artificial changes in the colour or quality of
product attracts the customers towards the Aldi. The company needs to focus on healthy and
affordable natural food products. Apart from this, if the company support to the farmers and
producers for providing best products, it will help the company to access the fresh food
products direct from the farms. However, this strategy of the company needs a strong
bonding between farmers and Aldi. Therefore, the company need to more focus on providing
support to the farmers in both monetary benefits and social benefits such as giving education
to their children, and can give the technical support to the farmers in their farming work
(Grimmer, 2018).
Conclusion
In conclusion, Aldi is giving strong competition to Woolworth and Coles in fresh food
products and grocery products. Aldi every year increasing its market share by its marketing
strategies such as great quality products on possible low prices, adopting penetration-pricing
strategy, and provide online facilities to customers to buy the products of Aldi on great deal
and discount offers. Despite being, the company has very small market share in the
Australian retail market. To enhance the market share of the company, Aldi needs to focus on
the fresh food products, which has great potential to grow in Australian market. Apart from
this, the Aldi also needs to retain customers because it is problem in the retail market that
very few customers are loyal to a single supermarket. This can be done by providing better
convenience facilities at the stores, providing low pricing products, and adopting the
aggressive price reduction on new products and brands.

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References
15 Minutes News.com (2016). New player joins grocery battle. Retrieved from:
https://www.15minutenews.com/article/64261988/new-player-joins-grocery-battle/
Aldi (2019). About us. Retrieved from: https://corporate.aldi.com.au/en/about-aldi/
Beaton-Wells, C., & Paul-Taylor, J. (2017). Problematising supermarket–supplier relations:
dual perspectives of competition and fairness. Griffith Law Review, 26(1), 28-64.
Cameron, A. J., Sayers, S. J., Sacks, G., & Thornton, L. E. (2015). Do the foods advertised in
Australian supermarket catalogues reflect national dietary guidelines?. Health
promotion international, 32(1), 113-121.
Ellickson, P. B. (2016).15 the evolution of the supermarket industry: from a&P to
Walmart1. Handbook on the Economics of Retailing and Distribution, 368.
Grimmer, L. (2018). The diminished stakeholder: Examining the relationship between
suppliers and supermarkets in the Australian grocery industry. Journal of Consumer
Behaviour, 17(1), e13-e20.
Grimmer, L. (2019). Disrupting the giants: How independent grocers respond to the
supermarket duopoly in Tasmania, Australia. Case Studies in Food Retailing and
Distribution, 12(5), 13-24.
Jie, F., & Gengatharen, D. (2019). Australian food retail supply chain analysis. Business
Process Management Journal, 25(2), 271-287.
Merrett, D. T. (2019). The Making of Australia's Supermarket Duopoly, 1958–
2000. Australian Economic History Review.
O’Mahony, B., & Lobo, A. (2017). The organic industry in Australia: Current and future
trends. Land Use Policy, 66, 331-339.
Pash, C. (2017). Coles is Still to come. Retrieve from:
https://www.businessinsider.com.au/the-biggest-threat-from-aldi-to-woolworths-and-
coles-is-still-to-come-2017-5

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Powell, D. (2019). Duopoly no longer: Aldi could be as big as Coles and Woolies by 2030.
Retrieve from: https://www.smh.com.au/business/companies/duopoly-no-longer-aldi-
could-be-as-big-as-coles-and-woolies-by-2030-20190806-p52eh4.html
Pulker, C. E., Trapp, G. S., Scott, J. A., & Pollard, C. M. (2019). The Nature and Quality of
Australian Supermarkets’ Policies That Can Impact Public Health Nutrition, and
Evidence of Their Practical Application: A Cross-Sectional Study. Nutrients, 11(4),
853.
Retail World (2019). Aldi Reveals new business strategy. Retrieved from:
https://retailworldmagazine.com.au/aldi-reveals-new-business-strategy/
Roy Morgans (2017). Aldi hits new high in supermarket wars. Retrieved from:
http://www.roymorgan.com/findings/7234-woolworths-coles-aldi-iga-supermarket-
market-shares-australia-march-2017-201705171406
Roy Morgans (2018). Woolworths increases lead in $100b+ grocery war. Retrieved from:
http://www.roymorgan.com/findings/7537-woolworths-increases-lead-in-$100b-plus-
grocery-war-201803230113
Xu, E., & Lee, T. (2019). Supermarket magazines and foodscape mediation in
Australia. Communication Research and Practice, 1-14.

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Appendix
Fig.1 The market share of companies in the Australian retail market in both grocery and fresh
food segments.
(Source: Roy Morgans, 2018)
Fig. 2 The figure shows the market share of retail chain organisations in Australia in grocery
and fresh food segments in 2017 and 2018.

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(Source: Roy Morgans, 2018)
Fig.3 The figure shows the status of Aldi in the Australian retail market in 2017 and
describes how Woolworth dominates in the market with highest market share.
Fig.4 The figure shows the market share of various supermarkets in grocery products in
Australia.
(Source: Roy Morgans, 2017)
(Source: 15 Minutes News.com, 2016)

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