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The retailers of Australia are growing fat on online deliveries. Woolworths grew its supermarket online sales by 92 per cent in the last year alone as they drove their profits to new record levels.
Big W hit a huge milestone for a bricks and mortar retailer – it now does half its traffic online. Woolworths’ CEO says the same trend will probably hit the rest of its businesses, which include Woolies supermarkets and Dan Murphy.
“I don’t think it will be long before digital visits exceeds physical visits at our stores,” said Woolworths CEO Brad Banducci last week. That’s a huge claim for a major retailer in Australia, a country which, pre-covid, was slow to adopt to online.
Online sales are now the shiny cherry on top of Australian retail, from JB Hi-Fi to Bunnings. But there is one glaring exception to the trend. Little old Aldi, which is stuck in the past. It has no online shopping offer at all.
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The German discount retailer is famous for doing things cheaply, like displaying products in the same boxes they are delivered in. It always avoids expensive choices, and online delivery costs money.
“Currently, the trade off to offering online shopping for the grocery sector means costly overheads,” an Aldi spokeswoman told me, explaining why their website has no shopping cart on it.
But in 2020, that choice left Aldi in the dust.
Aldi claims this is all fine, great actually, they’re not worried, not even a little bit.
“It’s no secret that we are different from the competitors. These differences continue to be the reason millions of Australians choose to shop with us every week,” a spokeswoman said. They say sales grew well in 2020 as people shopped for cheaper products.
But also: they admit that as soon as they come up with a plan, they’ll do online.
“Once we have a business model to deliver online shopping, without compromising on the price of our products, that is when we will act.”
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Are Aldi really cool as cucumbers? I doubt it.
Overseas, Aldi is scrambling to keep up, trialling delivery with Instacart in America, and in the UK it offers online shopping through Deliveroo. But in Australia, they still just offer trolleys you need to pay for and a really fast conveyor belt.
Aldi’s choices are all around keeping profitable. They have really small stores, which has been helpful in the pandemic, because it helps people get in and out faster.
Another Aldi money saving initiative is to mostly open only from 8.30am to 8pm. However, this has been hard for some shoppers during the pandemic, as people like to avoid busy times. Coles and Woolworths have seen shoppers spread out into the early morning and the evening to avoid queues. At Aldi that’s harder to do.
Aldi is famously slow to adapt new technology. Take barcodes. They delayed having barcodes on their products for years. Checkout operators had to memorise a unique code for each product on the shelf and type it into the register. But finally, when they cracked and put barcodes on their products, the barcodes were enormous, and there were multiple ones on each product, so that no matter which way up the product was when it was passed over the beam, it would scan.
Very clever. The super-fast checkout experience at Aldi is all about keeping costs down, so the same staff can stack shelves and run the check-outs.
You can expect that when Aldi does adopt online shopping, they will come up with something fiendishly clever that makes it much cheaper. It probably won’t be exactly like that viral TikTok video, but it will be something weird and unexpected.
Aldi might be slow to come to the online shopping party, but when it does, expect them to smash it.
Jason Murphy is an economist | @jasemurphy. He is the author of the book Incentivology.
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