How the Germans are winning the supermarket war | Switzer

There has been a resetting in consumer’s attitudes post the global financial crisis (GFC). Prior to the GFC, shopping at ALDI might have been slightly frowned upon but shopping at ALDI can now mean you’re a frugal, savvy and switched on shopper.

The hard-discounters, retailers with a limited product range, low prices and a convenient shopping experience, are resonating with Australian consumers. Countries with high labour costs, store rent and retail margins are particularly ripe for discounter disruption and will continue to fuel their growth over coming years. Whilst ALDI is leading the charge of the hard-discounters, Costco is enjoying steady growth and Kaufland (another German retailer) will be joining the party in late 2019.

In the face of increasing food inflation and stretched household budgets, consumers are increasingly turning to ALDI and Costco, particularly low to middle-income shoppers. However, the draw of the hard discounters is more than just good value. Whilst consumers trust that these retailers are delivering the lowest price, they also appreciate the ease with which they can choose from a limited selection of offerings, which saves them time and reduces the mental effort of selecting from large product ranges. The predominantly private label ranges are good quality and competitively priced, and the everyday low price (EDLP) pricing strategy drives loyalty as consumers feel they get good value every shop. Discounters also run very few promotions in comparison to the majors and this improves shopability and again improves convenience.

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How the Germans are winning the supermarket war – The Experts | Switzer.