In stark contrast to the majority of its rivals, Aldi scrapped the last of its online operations as it folded its click-and-collect service last weekend.
The German discounter and rival Lidl have seemingly shunned ecommerce, as the traditional grocers invest more and more into it.
For example, recently Morrisons has extended its partnership with Deliveroo to include its Daily convenience stores, Tesco has launched an online marketplace, and – despite wrangling over its final payment for the joint venture – M&S has reaffirmed its belief that its £750m Ocado deal holds “enormous opportunity”.
Retail Gazette explores why the discounters continue to dodge ecommerce in an increasingly digital world.
The discounters’ online challenge
Aldi initially launched click and collect in September 2020 amid the pandemic, when demand for online grocery soared. However, the chain has been gradually wrapping up its online offer in recent years.
It was quick to ditch its tie-up with Deliveroo in January 2022 in the aftermath of the Covid lockdowns, and scrapped its online delivery of Specialbuys and alcohol last year, having rolled out the service in 2015.
It explained at the time: “We keep our prices low by being the most efficient retailer in Britain and we have therefore taken the decision to stop selling wine and spirits online for home delivery from later this month.
“We will also stop selling our Specialbuys online for home delivery later this year.”
However, the move came after CEO Giles Hurley hinted it had “big plans” to extend its existing click-and-collect offer at the end of 2022.
Aldi is not alone. The German supermarket’s main rival Lidl also does not offer UK shoppers any online options.
By contrast, Tesco, Sainsbury’s and Asda joined the online world over two decades ago, with Morrisons the latecomer to the party, launching into ecommerce in 2014 using technology developed by Ocado.
However, some have argued that the discounters’ lack of online focus, which is more costly to service than in-store shopping, is not a bad thing.
Natalie Berg, founder of retail consultancy NBK Retail, told Which?: “The discounters are all about simplicity and operational efficiencies, so anything that adds cost into that model is naturally going to be scrutinised.”
M&C Saatchi chief data strategy officer James Calvert also previously noted that the discounters’ model and distribution strategy relies on “people visiting, buying regular items at great value and picking up a heap of other things from the middle aisle that they never knew they wanted”.
“It’s hard to replicate that online, plus setting up for profitable ecommerce distribution needs a lot of additional planning and validation.”
The discount grocers are not the only low price retailers to have shunned online. Last year, B&M ended its home delivery trial last year while in fashion, Primark only took its first step online in 2022 with its click-and-collect trial.
Although the move has been successful for the fashion retailer that plans to extend the trial to all UK stores by the end of this year, George Weston, the chief executive of Primark owner Associated British Foods, has ruled out launching home delivery.
He told The Sun late last year that while more lines could be added to its click and collect: “We will never do home delivery, and never do it on the full range.”
Its thought that its reluctance to launch home delivery is due to the costs and complexity involved, particularly in fashion, which unlike food, which has sizeable returns to deal with.
A costly distraction?
GlobalData senior analyst Eleanor Simpson-Gould believes similar cost concerns are driving the discount grocers’ move away from ecommerce.
“The overhead costs of online delivery services do not lend themselves to the discounter operating model, eroding the pricing power which has been the source of Aldi and Lidl’s market share growth in the last two years.”
She also points out that click and collect’s popularity is waning, with 18% of UK consumers saying they have used click and collect for grocery orders in the past 12 months, an 8.2 percentage point drop versus last year, according to GlobalData’s 2024 ‘How Britain shops’ survey of 9,000 respondents.
Simpson-Gould says this “signals that Aldi is correct in scrapping this fulfilment option”.
Retail Economics senior consultant Nicholas Found also believes that online is a distraction for the discounters.
“Part of the genius of the Aldi and Lidl proposition is streamlined operations and no-frills experiences,” he says. “Adding click and collect to their offering introduces a layer of complexity that isn’t just logistical. It involves forming new processes, reworking teams, and navigating layouts optimised for traditional, in-person shopping.
“It arguably becomes a distraction unless it could be scaled up without sacrificing margins. But for Aldi and Lidl, anything that adds cost and doesn’t improve its core low-price proposition is going to come under the spotlight.”
Found believes that Aldi is “betting its customers will continue to prefer to shop in person at the lowest cost option”.
Although this is in contrast to traditional supermarkets, he points out that these chains are catering for a broader demographic than Aldi and Lidl, including those who prioritise speed and are willing to pay a premium for online delivery.
With low prices the central tenet of Aldi and Lidl’s business, it’s clear to see why they have taken an alternative approach. And with the pair still investing in ambitious store expansion, there is still much growth to go for outside of online.
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