News

Loyalty card flagged as Aldi’s last big gap in taking on Coles and Woolies

Aldi will need to establish a loyalty program if it is to continue its rise against the might of Coles and Woolworths, a new study of the state of the Australian retail market has suggested.

While Aldi performed strongly across the board on a number of measures many consumers highlighted the lack of a loyalty scheme as a major gap, according to the survey of 758 consumers by loyalty specialist agency ICLP.

The survey asked people what their expectations were of retailers and then benchmarked them against their experience.

By comparison, for Coles 25% said their experience was rewarded against an expectation rate of 35%.

The biggest gap between loyalty expectation and experience was at Woolworths which was forced into an embarrassing and costly about face on its rewards program last year after making massive changes to the scheme.

While 34% of people said they had an expectation their loyalty would be rewarded at Woolworths, just 18% said it was their experience.

Simon Morgan, general manager of ICLP said as Aldi grew in stature it would have to address its lack of a loyalty scheme.

“Obviously they don’t have a large scale initiative in place and they are relying on that kind of everyday bargain positioning to bring back customers,” Morgan said.

“But I think also they are a challenger brand, they are not an incumbent and I think they are benefitting from there being lots of opportunity brought about by other players not meeting customer expectations and choosing to shop alternatively.

“There will come a time when their market share reaches a point where they’re going to need to invest much more heavily in in those sort of customer initiatives and providing people stronger reasons to return.

“Arguably that’s something they should be looking at right now in preparation for the fact that at some point in the future they too will be become an incumbent in the market.”

Asked how honest retailers were in how products were priced, 35% of respondents said that they thought the German-based supermarket would be honest in its pricing, behind Coles at 38% and Woolworths at 33%.

However, in their experience with the retailer 46% of customers said that Aldi store was honest in its pricing, compared to 24% for Coles and just 19% for Woolworths.

Simon Morgan says Aldi is winning the trust war

Simon Morgan, general manager of ICLP, said the finding was a surprise.

“That fascinated us too, there is no doubt there has been an impressive showing from Aldi in the study,” Morgan said.

“In many ways I think it possibly even does point to perhaps the official end of the supermarket duopoly because they have done so well.”

Aldi outperformed Coles and Woolworths on the key metric of consistent product quality, with an expectation of 69% and an experience rating of 67%, compared to Coles (55% and 44%) and Woolworths (54% and 36%).

It matched its rivals on treating personal information with respect, with 26% saying that was their experience, just behind Woolworths on 27% and Coles which topped the list on 29%.

 

One of the more surprising findings of the study was the decline in the standing of David Jones, once a name that saw loyalty, trust, respect and reliability at the very core of its brand, allowing it to stand aside from rivals such as Myer.

Retail brands which come to mind first for shoppers. Source: ICLP

David Jones only managed to squeeze in at number eight in the retail brands which came to consumer’s minds first, well behind Coles, Woolworths, Aldi, Kmart, Target and Myer.

The retailer elicited so few responses in the survey the researchers said they could not draw any statistically meaningful findings about the brand’s standing in the minds of consumers.

ADVERTISEMENT

SUBSCRIBE

Sign up to our free daily update to get the latest in media and marketing