Comment: Why has Aldi launched a smartphone and is it a good idea?

One month ago Aldi Nord in Germany launched two smartphone models – the key difference to the UK launch is that these were branded models from Samsung and LG rather than own-brand Medion.

In Germany this move was received well – the trade press clearly stated that the models would not set the world alight in terms of specifications and functionality but should be seen as very cost-effective entry models (especially for children), pay as you go handsets or in-contract replacements should the need arise. This move is also part of Aldi’s strategy to introduce more brands to drive footfall. 

In Germany the phones achieved two things – significant media coverage and awareness as well as underlining Aldi’s core value proposition, because the handsets were cheaper at Aldi than at any other source.

“This is all about showing strategic intent and the quality of your channel to market”

Paul Martin, Boxwood Insights

In the UK the picture is slightly different. Time will tell how customers react to the devices, but the response from the tech world has been pretty unequivocal: the Aldi offering does not represent cutting-edge technology, nor does it represent good value for money – a cornerstone of Aldi’s brand promise. At similar price points there are much superior and up-to-date devices available from Motorola and Nokia.

However, focusing on the technical qualities of the product misses the point. This is not about the quality of the device, or the amount of sales it generates. This is all about showing strategic intent and the quality of your channel to market.

The big players in the smartphone sector are on the verge of being disrupted by some of the Asian low-cost electronics firms looking to burst into the market with value offerings. By beating Tesco et al to the punch, Aldi may have positioned itself as the primary channel for these firms.

• Paul Martin, is managing director at Boxwood Insights