Aldi is not considering increasing the number of items in its range but will likely streamline or replace older items to roll out new products, and work with suppliers to expand in rapidly growing categories such as ready-made and convenience meals.
Lack said it was a “temptation” to expand the range beyond Aldi’s cap of 1800 products.
“If we don’t have the lowest cost of doing business, we can’t obviously afford to have the lowest prices in market. So that is a fundamental principle of ours to ensure that we keep our costs down, and range efficiency is the important factor,” he said.
A recent Choice study found that Aldi shoppers save 25 per cent on their bills, or $17 on average, when they filled a standard basket of goods at Aldi instead of Woolworths or Coles.
When developing a new product, Aldi says it will identify the leading brand in the market and seek to replicate those attributes (such as taste, texture, provenance) to “meet that benchmark quality”. A vanilla ice-cream by Aldi-owned brand Monarc Indulge, for example, spent two years in development before Lack signed it off.
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“The reality is people are not willing to compromise,” he said. “People are down trading from eating out to eating more at home … they’re already in some ways compromising a luxury in life. So we know they’re not going to come back to us if that doesn’t stack up.”
The discount grocery chain entered the Australian market in 2001 and has just under 600 stores around Australia, bar Tasmania, and aims to add about 10 stores a year.
At the Greens-led Senate inquiry into supermarket prices in April, Aldi Australia chief executive Anna McGrath effectively ruled out setting up stores in areas such as Tasmania or Far North Queensland due to the costs associated with greater supply chain complexity.
Like other retailers, Aldi has experienced an increase in shoplifting, but unlike Coles and Woolworths, has chosen not to invest in technology solutions such as auto-lock gates or hiring more security personnel due to cost.
“We try and find the right balance with the investments we need to make, and you don’t want more walking out the door than the cost of putting [in] some of those technologies, but it’s something we have made a decision not to invest in,” Lack said.
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