Aldi CEO Tom Daunt says the chain is ready to innovate

German supermarket chain Aldi is ready to unveil its biggest changes since it first arrived in Australia 20 years ago.

Aldi CEO Tom Daunt: ‘We are not innovators in the space … we often appear late to the party and that is a deliberate strategy.’ Picture: Hollie Adams

Aldi chief executive Tom Daunt readily admits the German supermarket is often “late to the party” when it comes to innovation, but after years of biding its time – and watching others make costly mistakes – the supermarket chain is ready to unveil its biggest changes since it first arrived in Australia 20 years ago.

In a furious spate of activity across Aldi’s operations in Australia, Mr Daunt is overseeing a ramping-up of its supply chain, the emergence of an online offer for the first time, self-service check-outs and the opening of its first small-format store.

There will also be as much as $1bn invested in new state-of-the-art distribution centres.

In Sydney on Wednesday, Aldi will open its maiden “corner store” format, a convenience store under the Aldi banner that will be about half the size of a standard Aldi. It will take the fight to Woolworths and Coles, which in the past few years have invested hundreds of millions of dollars in local convenience stores that typically serve inner-city shoppers.

“We are not innovators in the space … we often appear late to the party and that is a deliberate strategy,” Mr Daunt said.

“We are not driven by what the competition does and we are very often late to the party on many things, and that could be our development of an e-commerce business, it could be imple­mentation of technologies in our stores like self-service check-outs or so on.

“It is a very deliberate strategy because it is critical that we retain a highly efficient and cost-effective business and sometimes when you are at the leading edge of these technologies there are a lot of costs, there are a lot of complications and a lot of the solutions don’t work.

“We would rather be a little bit late but arrive at a strategy that ­allows us to bring the very best offer to the customer.”

Mr Daunt said that was what Aldi was now doing with its corner-store format, complete digital transformation and recent trials of e-commerce and self-checkout registers.

He said Aldi would open as many as four corner stores in the next year as a trial before considering taking the concept ­nationwide.

“They are essentially Aldi stores in a smaller format. The traditional benefits that our customers have enjoyed over the last 20 years will be evident and available at the corner store format,” he said. “There will be some range changes, so some of the products that don’t typically really appeal to inner-city urban dwellers, like 10kg dog food, we have removed and that has given us space back and allowed us to squeeze a traditional Aldi store into a smaller format.”

A standard Aldi store is about 1200sq m, and the corner store will be half that size. There will also be a stronger focus on smaller pack sizes, convenience and fresh products at the corner stores.

“The corner store is about ­developing a format to allow us to bring the Aldi offer to those ­customers in high-density urban locations,” Mr Daunt said. The corner store will hold about 2000 types of products as well as weekly general merchandise specials.

Aldi will also continue to expand its nationwide footprint of standard supermarkets by about 15 new stores a year over the next few years, and will have about 580 stores by the end of the year.

There will also be a trial of self-service checkouts, something the supermarket majors and other large retailers such as Bunnings and Kmart have had for years.

Aldi has opened a self-service checkout at a store in inner-Sydney’s Darlinghurst.

“We know that one of the things our customers have asked us for many years is to make the checkout experience even more efficient,” Mr Daunt said.

“We have the fastest checkout operators in Australia but there are some customers who are increasingly shopping more frequently with less basket sizes that are looking for self checkouts.

“The processes are well established and we are trialling the first of those. We will trial 10 stores.”

A trial of e-commerce began a few weeks ago, allowing items from weekly specials to be ordered online, especially more bulky products such as fridges and freezers.

Backing this all up will be the rationalisation of Aldi’s eastern seaboard distribution centres, with the move to shut down six of its east coast facilities to build three modern distribution centres, with some automation.