Aldi CEO questioned about why their prices are lower than Woolworths and Coles.

Amidst the recent crackdown on supermarkets, the Australian Competition and Consumer Commission (ACCC) has been conducting an inquiry into the operations of the secretive German supermarket chain, Aldi. According to research, Aldi has been found to be significantly cheaper than its competitors, Coles and Woolworths, and the reason for this has now been revealed.

In an interview, Aldi Australia's national buying managing director, Jordan Lack, has candidly shared the secrets behind the company's low prices. He explained that Aldi's stores are smaller in size, have fewer staff, and offer a smaller range of products compared to its competitors. Lack believes that these small details are what allows them to keep their costs down and pass on the savings to their customers.

Aldi's supermarket shelves carry a mere 1800 items, while Coles and Woolworths offer a range of 20,000 to 25,000 products. For instance, if a shopper were to look for raspberry jam at Coles, they would have seven different brands to choose from. At Woolworths, they would see eight brands, but at Aldi, there is only one option. This limited range of products is a big part of how Aldi manages to offer prices that are 10-30% cheaper than its competitors.

Lack further explained that having a larger range of products adds to the complexity and costs of their supply chain. This statement was supported by retail expert Gary Mortimer, who stated that having fewer suppliers and wholesalers allows Aldi to benefit from economies of scale. The ACCC will be spending the next two weeks questioning the top executives of Aldi, Coles, Woolworths, and IGA affiliate Metcash regarding their pricing strategies.

The final report of the inquiry will be submitted to the government in February, and it will shed light on whether Australians are being overcharged at the checkout. Mortimer believes that this inquiry may not necessarily result in lower prices for consumers but could lead to more transparency in the industry. In the meantime, Aldi is making a case for offering less choice to its customers, while international giant Aldi continues to dominate the Australian market.

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