Bricks are bouncing

Aldi was a little later than usual in developing its crucial Christmas campaign strategy as it wrestled mid this year with anticipating what the consumer mood and economic conditions would be six months out.

It appears to have landed in the right spot as value returns with gusto to the market and shoppers continue their switch back to bricks and mortar stores from the covid-triggered ecommerce surge of the last three years. Aldi does not sell groceries online and Richardson would not be drawn on any ecom plans other than it was a “work in progress and we’ve done lots of interesting trials and lots of really interesting learnings.” When asked if it was likely Aldi would launch an online service in the next 12 months he said “probably no comment on that one.” Aldi suppliers say the retailer has faced significant headwinds in deploying new IT systems.

But like other retailers including the private equity-backed owners of General Pants, Lego, SurfStitch and Ginger & Smart, Richardson noted bricks and mortar retail was now outpacing online growth as pureplay online retailers struggle with surging customer acquisition and performance marketing costs – search and social particularly. Those with omni-channel offerings are also seeing their ecom growth crimped this year.   

“What we're seeing in the numbers is that ecommerce is definitely softening and bricks and mortar is growing,” he told Mi3. “And that's the first time in the last probably two years where bricks and mortar growth is outstripping ecommerce growth. That's a real opportunity for bricks and mortar retailers to do something that customers are looking for. After two years of sitting behind the laptop, everyone's got bored of that, they want real world experiences. So our team internally has done a lot of work to make sure that the ranging strategy is right. We've got the right products in market in the right weeks and the right quantities to make it really appealing for a shopper to come in and see an amazing array of special buys.”

Ecom softens – a blip?

Richardson echoes the sentiment of the Chairman of retail groups Alquemie and Mosaic Bands – with upwards of 1000 stores across General Pants, PumpkinsPatch, Lego Stores, Noni B, Rivers and online pureplay SurfStich – who told Mi3 this week that SurfStitch sales were “probably flat-ish to 2019 maybe slightly down…you’ve definitely seen a shift from online from a year ago back to bricks and mortar.”       

But is it a blip and short-term novelty for the masses able to get back out again?

“What we're seeing at the moment is that people are valuing slightly different things,” Richardson said. “Utility is the experience of getting out into the real world. I think you're right. I don't think that's fully washed through yet. I think people are still buzzing off the idea that getting into a store, going to a restaurant or being out in the world and going to the pub is still fun. So I don't think that has worn off yet," he added.

"But I think what's potentially going to have a greater influence over the next couple of months and into next year is the influence of price as a driver of purchase behaviour. Price is definitely back into the ascendant because of the inflationary environment that we're in. Shoppers are having to make decisions about how they shop and what they value is changing. So the delivery fee to get my whatever to be delivered suddenly becomes a nice to have.”

With those contingencies as a backdrop, Aldi launched its big-hitting Christmas program last weekend continuing its “You Can’t Overcook Christmas” theme from BMF, launched in 2021.  

Christmas brand halo

Richardson said the brand campaign and its effectiveness was a crucial annual marker for the grocery chain, designed to tap the biggest shopping period of the year in the lead-up to Christmas but also deliver a halo effect through the March quarter. If Aldi did not hold or grow it’s market penetration, store visit frequency and basket size in those subsequent months, the retailer’s Christmas marketing activities would be deemed an underperform, or worse. Aldi, Richardson said, viewed its Christmas campaign as both a lower sales funnel mechanism to drive both short-term sales and retain its impact for growing market penetration – the number of total grocery shoppers buying from Aldi – for mid-term.   

“The challenge with any sort of Christmas campaign is you're looking for a bit of a unicorn – and by that I mean a campaign that sort of magically is able to drive brand affinity but also drive incremental sales,” Richardson said. “I guess that’s the broad context for any Christmas campaign that we've done since I've been here for six or so years. If you get your offer right and you get your experience right, there's a real prize there – because not only do you get those benefits in the short-term, the campaign moments, but you also see the benefits that it can drive for the brand in the mid-term. We see definitely in our sales that January, February, March is impacted by a successful Christmas campaign. So there's absolutely short-term and mid-term customer acquisition benefits from a Christmas campaign. It's got to do significant heavy lifting from a retail perspective: ultimately what I get judged on is sales.”

Brand 40 per cent of budget

Richardson said the weighting of Aldi’s budget for its brand campaign through Christmas is circa 40 per cent with the remainder on more tactical promotions for products and specials. He said consumers are in a different mindset and spending propensity through Christmas, which is why the branding effort is critical.    

“That's definitely the approach we've taken with Aldi, which is trying to appeal to the heart and the head over a prolonged period of time,” he said. “Their emotional headspace is completely different to what you see throughout the rest of the year where they're making decisions, yes, on a rational level. But their purchase drivers are shifting during that Christmas period. That's just a great opportunity for a brand to build a connection with a shopper. And that's why the Christmas campaign has to be able to operate on those two levels of hard retail but also has to drive those emotive connections. That's obviously why you see so many brands leveraging that moment – because shoppers are primed to receive those messages and they are quite happy and quite excited about what's about to happen.”

Aldi’s Christmas campaign and media activity typically moves in three waves: a big TV-led launch component designed to capture the 40 per cent per cent of shoppers who go early for Christmas through to the “large rump”, mostly men, who are last minute. 

“You've got early birds who get their stuff organised, as the name would suggest, early,” said Richardson. “You have probably 40 per cent of the market who just do their shopping in the lead up and then you've got a large rump, which is the balance, who are last minute panic people – who tend to skew male – who literally roll in and just run around the store grabbing whatever they can get. We have a very specific media strategy that's designed to reflect consumer behaviour. 

Media plan: three speeds

“There's almost three speeds to the campaign. One is about driving demand attention at the launch phase. That's the first two weeks of the campaign where we lean on big mass market channels like TV screens, high impact display and social. We do video takeovers, large format out of home and that's about landing the core campaign proposition," he explained.

"Then we're into what we call a sort of sustained excitement phase, which is that mid-phase where we start promoting product. There are some key on sale dates that we're trying to support with certain specialised products – and that's about using the campaign construct to try and drive engagement through social channels specifically, but also through sponsorships and using cinema and out of home. That's got a slightly heavier product dimension to it," he added. 

"Then at the end of the campaign, that's when we ramp up and we really drive into heavy duty retail activity. Radio is a really strong channel for us and lots and lots of search, lots of display, short form video and activations as well. So the campaign construct itself, from media point of view, is multilayered.”

Richardson calls BMF's new campaign “immensely entertaining. It’s basically a ninja fight between a mother and a daughter-in-law who are trying desperately to get the other to take the last prawn because they don't want to be the one that eats it. All the while the family watching this unfold are like, here we go ... but there's more prawns because we've done the shopping at Aldi. It's immensely entertaining and I'd say an unexpected direction for us to have headed in – but it feels incredibly warm and very Christmassy and there's a really strong insight baked into the middle of it.”

What next for Richardson?

And finally, what next for Richardson, who announced last week he would leave the grocer in February, replaced by former Westpac marketing boss Jenny Melhuish. 

So why and what next? “For me energy is really important and you want to guard against complacency, I guess, in anything you do. I've had an unbelievable six years out of it, but now feels like the right time for me to move on. This is an amazing journey but genuinely it is time for me to kind of have a look around and see what else is out there.”

Does Richardson have a gig in mind? “I don't actually finish with Aldi until February next year. My commitment at the minute is obviously to Aldi delivering against all of the plans for next year and to delivering this amazing Christmas campaign. I think once I've done that then it will be time to take stock. One of the things I would say is it would be fantastic if I could spend some time with the family in January. Really that's one ambition. But one of the brilliant things about working at Aldi, it's an incredible platform just because of the interest in the business," said Richardson.

"People are really always interested in talking to you about Aldi, but also because of the work and the marketing that we've done over the past twelve years. It's set a platform certainly in our industry, so I’m having lots of really interesting conversations with lots of varied and interesting businesses at the moment from lots of different verticals. I'd say one of the things that I noticed from my move to Aldi is what always interests me is businesses that are customer centric; genuinely putting the customer in the middle of everything they do and are interested in using marketing to drive growth. That's one of the common themes across all of the people I've been having conversations with. And hopefully we'll continue to have conversations with over the coming months.”

So no life change to start a craft beer or consumer product then?

"I don't actually know how to brew, which probably put me out of the reckoning for that one,” he quipped. “No, I’m 100 per cent brand customer, brand strategy and marketing. That is absolutely my passion area and so being a CMO and being successful in that realm is 100 per cent my ambition. So I’m really keen to continue in that world.”