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Retail review: Aldi retail strategy, Emma Robertson - (IRM57)

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Aldi has made its first moves into ecommerce and with the new wine site spearheading a £35m investment it is clear that this is only the beginning.

Strategically Aldi and Lidl are moving into ecommerce and multi-channel, both discount retailers declaring their intent back in 2014. However, they now face the economic reality that their more established UK rivals have been battling with for years: how do you continue to make money when your digital channels are either unprofitable or at best break-even? It was these financial considerations that led Morrisons to take a more circuitous route to moving online, and experiment firstly with Ocado and more recently with the headline grabbing Amazon deal. Tesco has been in online grocery for over a decade now, and still talks in terms of digital being part of a strategy to make the customer profitable, not the channel in isolation. For discount grocers already operating at the tight end of margins, the case must be even more marginal.

However, the customer trend is established - the future of retail is multi-channel and no long-term contender can afford to be without a digital strategy. Arguably it is the long term intent sitting within the digital strategy that is of most interest to the grocery market. Investments of the magnitude Aldi is declaring signal that it is here for the duration, seeking to consolidate its market share whilst continuing to grow. And with headroom to expand in terms of both customer segments and geographical locations the investment in digital looks more strategic than the launch of its case-only wine site might suggest.

The Aldi wine site in itself is a solid example of an ecommerce implementation. From my test purchase (the things I do for InternetRetailing), the experience was intuitive if unexceptional, and whilst by no means a design expert I was relieved when the 1970’s formica-brown was replaced by the more on-brand Aldi blue in the checkout. The range is more extensive than in-store, and whilst easy to navigate was difficult to choose from; information felt limited compared to its direct competitors in Majestic or Waitrose Wine, let alone The Wine Society.

And that leads to an interesting question. Who is the site targeting and who are the competitors? Wine aficionados who know what they are buying, or Joe public (and me) who know a few grapes or regions, but will only know it was a good buy when they drink it? As a price-driven discounter the answer seems to be anyone looking for a good deal, but there is an inherent risk in the proposition being solely price driven. The store wine proposition which attracted both press coverage and new customers was predicated on a limited range at a remarkable price - now that the range is extending to 110-120 bottles the quality/price promise is harder to guarantee, with prices increasing and bargains harder to spot.

The scene is set for the start of the Aldi ecommerce journey and, when coupled with an aggressive store opening plan and a range of delivery/collection options, the foundations look solid from an infrastructure point of view. The challenge is perhaps more from a customer perspective – questions of who Aldi is targeting digitally, and delivering on expectations for that target market will require more finesse than the price-driven strategy they have executed in the store-only environment. With the wine site launched, in Spring, ‘special buys’ will be available to purchase online. Where non-Aldi customers may previously have visited the store to experience the broader range and attractive price propositions, now they can go online. Can the site do enough to convert them to the full grocery range when it becomes available, or is Aldi taking away a key reason for visiting a store?

Scoring

The simple scoring from Transform is based on whether or not five services are offered by the retailer in the UK with a score of 0 for no and 5 for yes. On this basis, Aldi scores 20/25.

Collection in-store: Yes

Mobile app: Yes

Mobile web: Yes

iPad app: Yes

In-store tech: No
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Featured In
InternetRetailing Magazine – March 2016 – Issue 57 (IRM57)

InternetRetailing Magazine – March 2016 – Issue 57 (IRM57)

Featured In
InternetRetailing Magazine – March 2016 – Issue 57 (IRM57)

InternetRetailing Magazine – March 2016 – Issue 57 (IRM57)

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