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Thursday, December 3, 2020

Aldi Trials Online

Aldi’s UK CEO Giles Hurley has termed the past few months “an extraordinary six months,” and said that is has been like “nothing I’ve ever known in grocery.” Whilst “business performance has been very, very solid,” he says that “consumer habits are changing and we (Aldi) need to evolve our business to meet the new demands and we’re actively doing that.” At a store in Loughborough, Clive Perkins drives in-branch to make a collection of his click and collect groceries, amongst the first of its kind to be launched by the German supermarket. Prior to this, he hadn’t been to a supermarket since March, but he waits now for his shopping to be delivered to his car. He has been a loyal shopper at Aldi for nine years before the pandemic. 

He says that, for the duration of the pandemic, “we’ve done everything online.” He reported to the BBC that “we’ve been able to isolate because of the risk. We’ve got a regular sot with somebody else, but we’ll drop that if this works.” His words suggest that online shopping may well be a viable and profitable option for Aldi, at least as far as it’s regular customers are concerned. Given the role that discounters have played in the industry over the past few years, it’s likely that the trend of customers being siphoned away from bigger competitors may continue, and especially in the difficult financial climate created by the pandemic. But since the pandemic began, buyer habits have shown a greater increase in online shopping, with slots for Asda and Morrisons consistently sold out in the first few weeks of the pandemic. 

Discounters didn’t get much of this action, but the decision to move online could see a sales boost for Aldi, as a Deliveroo rapid delivery service as well as the aforementioned click and collect service are trialled. Fifteen stores will see this service introduced, as Hurley says he is “very, very confident that this is a model we can scale successfully.” It was during the last recession that discounters saw a boost in sales, but the economic downturn caused by the pandemic sees shoppers buying premium when supply outstripped demand, says Adam Leyland, editor of grocery trade magazine The Grocer, in conversation with the BBC. 

Fraser McKevitt, Head of Retail and Consumer Insight at consumer analysts Kantar says that although “Aldi is still seeing strong growth, they’re still selling 10% more than they did last year, but for the first time they’ve grown behind the market.” This is due to the conditions imposed by the pandemic, which has seen “shoppers doing fewer but bigger shopping trips.” Aldi is confident that they will win the scramble for buyers, despite the big four supermarket names already cutting back prices in anticipation for a competition of costs. But the online move might be a necessary strategic move for Aldi when it comes to winning that war–and Leyland says that “ignoring that market altogether is a dangerous game to play.” That’s because online grocery shopping forms 12.5% of all sales, and that number might grow depending on the direction the pandemic takes, but certainly, with the new guidelines following Johnson’s COBRA meeting, there has been a growth in sales of certain items such as loo roll and pasta, although, Hurley says, it’s nothing like what the industry saw in March. Adam Leyland adds that it’s shaping up to be a festive period like no other.

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