Following Aldi’s encroachment on the market share of supermarkets like Tesco, adopting a multichannel approach was the next natural step.
The key challenge for Aldi will be offering the same level of convenience for consumers both offline and online, while also operating profitably. How it approaches home delivery and other fulfilment options such as click-and-collect beyond wine and non-food items will be crucial to its long-term multichannel success.
Offering click-and-collect can be costly for retailers. The process is more complex than simply picking a product from a shelf and packaging it. Stock must either constantly ship between stores, be taken from the local store, which must maintain very accurate stock levels, or more conventionally direct from warehouses to stores.
Tesco’s recent decision to raise its free click-and-collect threshold highlights the small margins that even the big retailers operate on when providing a multichannel proposition.
Diversifying its appeal
Unlike in its physical store estate, Aldi may not be able to compete on price alone if it wants to turn a profit online. It may have to diversify its appeal and fellow value retailer Poundland’s recent website launch could offer some valuable lessons.
In addition to showcasing the extensive product range available to buy online and in-store, the retailer’s new website features gamification and bulk buying around seasonal events such as Halloween.
In order to differentiate its online proposition, Aldi may have to consider offering similar value-added services. The Christmas food shop, for instance, could be the perfect chance to offer Aldi’s customers a competitively-priced deal delivered straight to their door.
Levelling the playing field?
Looking ahead, all eyes will be on Lidl to see how it responds to its rival’s multichannel development. The battle between FMCG retailers and their multichannel offers is likely to be determined by factors other than unprofitable low-priced delivery options.
When adopting a multichannel approach, these retailers can no longer rely on price alone.
However, it will be interesting to see whether, as consumer expectations change and a higher proportion of transactions are done online, Aldi can maintain profitability as well as like-for-like sales growth. This shift may result in a levelling of the playing field, as the discounters make equal investment in technology and logistics to match the big four.
As digital experiences across the market are standardised, consumers will again start to make informed choices about where they should shop based on price, customer service and quality.
- Darryl Adie is managing director of ecommerce agency Ampersand