The secret to Aldi’s success is choosing what not to do

Abstract

Dick Smith has laid the blame for closing his Australian-made processed food lines squarely at the feet of Aldi Australia. He accused the German retailer of “extreme capitalism” and warned the CEOs of Woolworths and Coles that “unless your companies move towards [Aldi’s limited range and high proportion of private brands], you will very likely become uncompetitive”. But this betrays a fundamental misunderstanding of Aldi’s strategy and the limits of its appeal in the Australian market. An important element of Aldi’s strategy is a severely limited range of “preselected” products, overwhelmingly private brands. The company’s smaller range (some 1,500 store-keeping units as opposed to 20,000..