Why Aldi and other stores mightn’t be cheap for long

Experts say we’ve gotten so sued to cheap prices that we mightn’t be able to handle it if they increase…

Experts say we’ve gotten so sued to cheap prices that we mightn’t be able to handle it if they increase… and they blame Aldi.

The German supermarket has shaken up not only the grocery industry but also retail in general as more and more shoppers flock to their bargain basement sales to get their hands on anything from drills to ski gear to white goods.

And even the Reserve Bank is concerned about it.

You see, inflation hasn’t been going up at all recently – in fact retail prices have stagnated so much so that the RBA did a big investigation into the cause and found Aldi was at the centre.

The RBA says we’ve had “a large downward shift in the average rate of retail inflation” that is not explained by labour costs or import costs, but by foreign retailers.

“Inflation in the price of retail goods has been surprisingly low for a number of years. The considerable depreciation of the Australian dollar over this period by itself would typically have led to higher retail inflation”, the RBA said in their report.

And retailers are trying to be careful of increasing prices, as they know that with Aldi’s popularity, it could drive them away. The bread and butter of any Australian retailer are their local customers, so instead they have been cutting staffing, chain suppliers and so forth, but this in turn has angered those who rely on their bread and butter: the supermarkets!

Shoppers may need to prepare for low prices to be a moment in time, and not something that will continue to fall.

The RBA said, “In a number of market segments, liaison has attributed the increase in retail competition to the actions of a perceived ‘market leader’, which is generally looking to expand their market share, effectively increasing supply. This has led a number of retailers to report that they believe demand for their goods is very price sensitive, and fear that they will lose sales volumes if they increase prices”.

Aldi’s drastically low prices have meant retailers such as Bunnings have had to up their game, after the German chain offered a very cheap drill.

A spokesperson for Aldi told SmartCompany its Special Buys are designed to “help our customers get the best value on products which support their passions and interests”.

“Our Special Buys deliver hard to beat value because our streamlined business model enables us to keep our prices low. Our logistics and supply chain operate with world-class efficiency, keeping delivery routes short and employing best practice warehouse techniques”.

But the RBA has proven that their supply chain is causing headaches across the board, putting the onus back on consumers to make good choices.

What might be more of an issue however is that sometimes consumers don’t have a choice to shop around…

So tell us: do you think that Aldi is doing a good thing by forcing other retailers to drop prices? Or should Australians be supporting local businesses and the real people who get food from farm to table?

  1. aldi is the best thing to come to australia. you dont have enough retaliers here.woolies coles bunnings its a joke

  2. Sally  

    I’m a reasonably smart person but I have NO IDEA what the purpose of this article is. From misleading headline to a hypothetical closing question, the author failed to logically present their case.

    If I were to guess, those retailers most impacted by Aldi’s presence in Australia wish the would just pack up their kit and caboodle and LEAVE.

    I love Aldi and the alternative they offer to the over bloated majors, Coles & Woolies.

  3. Lets just wait a few weeks for the world financial fallout , from Brexit and elections . Shall we

  4. Sally  

    BTW, most of Aldi’s products and produce are actually Australian ingredients and processing.

    The article implies that good old Aussie ‘icons’ Coles and Woolies look after local producers better and that they carry more Aussie products.

    I tried to buy an Australian tomato soup at Both of the Big Two. Of all the brands offered, only one was Australian. In one of these giants, there was space on the shelf for this brand but the product was MIA!

    So please, let’s not use dirty tactics on this site.

  5. sarie groenewald  

    I do all my shopping at Aldi and I cannot see why the RBA is involved in this at all. Surely the public is free to shop where they want and find goods at best prices. Coles and Woolies have been robbing the public for too l;ong.

  6. Bette Campbell  

    Unfortunately there are areas of Australia that only have Woolworths, Coles and IGA and some that only have IGA so we just don’t have a choice.

    • Rob Ozanne  

      I have a choice of a relatively small IGA and an even smaller Foodworks oh, and a very small 7 Eleven !

  7. TheWombat  

    You are asking two different questions here, which should not be separated with an ‘or’.
    You’re suggesting that Woolworths, and Coles are local businesses?

  8. i feel this is put out to discredit aldi i dont shop there that often i find iga better but i think woolies and coles put out bad stuff to put aldi down

  9. Wayne Watkins  

    Aldi employs lots of Australians and sell way more Oz products than the big two monopoly do . Try finding any Dick Smith products at Woolies or Coles . They are never at eye level and are either on the top or bottom shelf . All the Chinese & foreign products are at eye level in the big 2 .

    • Don’t know where you shop, but they’re right there with the rest of them in my local Woolies!

  10. Linda fawcett  

    What a lot of rot, talk about scare mongering….all sounds plausible until you stop and think about it…..have shopped with Aldi ever since they they came to Australia, I am originally from Melbourne, and same comments were made then, all that resulted was the bigger supermarkets didn’t have the monopoly and customers were finally the winner……all it really means is that Coles, Woolies and other supermarkets’ profits may not be as big, not as if they are just breaking even….Australians aren’t stupid nor ignorant so they should stop being so arrogant and treating as as if we are….

  11. John Brants  

    Six years ago I bought a 42 inch TV and a 23 inch all in one computer from ALDI. Each item was $400 cheaper than similar (but lower specifications ) items from bleating Gerry Harvey’s stores. Both items have been problem free .I must be a terrible person for reducing the profits of Harvey Norman!. Same for Coles and Woolworths with their rather ( now past) over the top profits.Pensions don’t rise as fast as Supermarket prices do or perhaps I should say did now that ALDI are here. What’s up at the RBA? Have they been bleated to by parts of the top end of town?

  12. Jackson  

    Your closing line ‘Or should Australians be supporting local businesses and the real people who get food from farm to table?’ is ridiculous. You’re implying that ALDI doesn’t support local business or real people. Why don’t you ask Australian suppliers (i.e. local businesses and real people) how much they like dealing with ALDI and how much they appreciate having someone other than Coles and Woolworths to sell their products to?

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