ALDI effect starting to impact SA and WA

Just a few months into its major expansion, it seems the ‘ALDI effect’ is already being felt in South Australia and Western Australia.

Canstar Blue’s latest survey of 3,000 supermarket shoppers has found that average weekly grocery spending has dropped in both states.

In South Australia, the average weekly grocery bill has been recorded at $135, compared to $139 in 2015. In Western Australia the change has been even greater, with average spending at the checkout down from $146 to just $134 in the space of 12 months.

“The ALDI effect doesn’t just apply to the supermarket chain actually opening its first stores in South Australia and Western Australia, it also applies to how the other stores are reacting. You don’t need to shop at ALDI to benefit from lower prices,” said Head of Canstar Blue Megan Doyle.

“Coles, Woolworths, IGA and Foodland have had no choice but to react in an effort to keep their customers, and keep them happy. That means prices coming down and a renewed focus on providing better customer service.

“It’s hard for the other supermarket chains to compete with ALDI on price, so they need to look for other points of difference to keep their customers loyal – whether that’s quality products or rewards programs. Simply being the most convenient store isn’t enough anymore.

“As expected, consumers are switching in their droves. It’s still early days in South Australia and Western Australia, but ALDI will no doubt be pleased with how the expansion is progressing.”

Switching supermarkets

Before ALDI’s first stores opened in South Australia and Western Australia, consumers in the two states were the most loyal to their existing supermarkets. In 2015, just 18% of adults in SA and 16% in WA reported switching stores in the previous 12 months.

However, in 2016 the number of South Australians who have switched supermarkets in the last 12 months has jumped to 31%. In Western Australia the number has increased to 23%.

The number one reason for switching supermarkets is to save money, but some consumers report changing in search of better quality products or simply because they have moved home. However, shoppers in South Australia and Western Australia were the most likely to admit they are “not sure” why they have started buying their groceries elsewhere.

“If an ALDI store opens up within a few kilometres of your home, you would have to love your existing supermarket an awful lot to resist the temptation of at least giving ALDI a try,” said Mrs Doyle. “The hype around ALDI is remarkable, but for good reason. ALDI is different, it appeals to a huge segment of society, and of course it’s cheap.

“Cheap doesn’t always mean you’re getting a bargain, but in the case of ALDI it has managed to strike a winning balance between price and quality. Consumers in South Australia and Western Australia like what they see so far.”

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