Aldi boss makes big confession
ALDI'S top exec in Australia has made a candid confession about what critics have pointed out for years.
He has admitted the German retail giant has a tendency towards the secretive.
Speaking at a company event in Sydney earlier this week, chief executive of Aldi Australia Tom Daunt said this reticence to talk publicly had led to what, he said, is "inaccurate and misinformed information" about the supermarket's operations.
One of the biggest bugbears of rivals is that because Aldi is a privately opened company, rather than traded on the stock market, it is not compelled to release to the public the level of financial information demanded of rivals Coles and Woolworths.
"Can I ask why you are so secretive? Surely being worth $30 billion US dollars (that's $40.63 billion Australian dollars) you have a responsibility to be open and explain your long term plans to all those who are affected?"
But Aldi's new found openness doesn't extend to fully opening the books, with Mr Daunt saying the company's private ownership was a "huge advantage".
In the space of 17 years, Aldi has grown from two stores in Sydney to 500 across the country. According to research by Roy Morgan, Aldi is now Australia's third largest supermarket with a 12.1 per cent market share. Although it's still less than half the size of number two player, Coles and there have been murmurs that company may be approaching saturation point in Australia.
"We've definitely been guilty in the past of focusing on running the business, on taking care of customers, and we've invested no time or effort in informing interested parties in what on earth we're doing," Mr Daunt said at the event in the inner suburb of Waterloo.
"The benefits of that approach have been really clear; when we're not having to spend time on explaining what were doing we've got more time to get on with (running the business). But the disbenefits (sic) are also very clear.
"Occasionally there's inaccurate misinformed information out there about who we are, what we're doing and where we are going and that misinformation is even more pronounced when you consider we can't be compared to other supermarkets," the twenty year company veteran said.
The company has pushed the door open slightly on its Australian performance and now reveals limited financials including the tax it pays. In November, Fairfax reported Aldi Australia was clocking up sales growth of more than 10 per cent and its sales had surpassed $8 billion locally.
But that's about as much information as you're likely to get.
"Private ownership is a huge advantage for us. Unlike public listed companies that get a lot of pressure for short term results, we don't have to act that way.
"We can always take a long term strategic and sustainable view; our philosophy is if you partner with suppliers truly then you can develop a win-win scenario that is great for them and great for us and that benefits the customer, "said Mr Daunt.
"If you look after employees you have a better customer experience, if you look after customers they repay that favour and come back next week and spend their money with you, so that's the long term approach we take".
UNIQUE BUSINESS MODEL
Mr Smith, who blamed Aldi for the closure of his food business last month, said the supermarket stocked less local products due to its ownership.
Aldi bristles at the suggestion, saying it has an "Australia first" buying policy and works with 1000 Australian suppliers.
Mr Daunt, who has worked at Aldi since he was 25, said the company's foreign ownership, far from a disadvantage in the PR wars, was a benefit.
"Our international heritage is not a secret and we've learnt a lot from that."
Aldi's limited range of products, the addition of special buys to attract excitement and its stripped down stores was a "unique business model" 50 years in the making developed, for the most part, outside Australia, he said.
"We have an ambition to supply good quality products at much cheaper prices than anybody else and we want to achieve that by acting in the right way so we don't adopt unsustainable or questionable business practices.
It may insist on simplicity, but the company has said what makes it stand out is as much as 17 different traits. These include removing artificial colours from foods, its phase out phosphates from laundry products and the reduced range.
Aldi has also said it pays its "fair share" of tax in Australia. The company said it pays an average of 31 per cent on pre-tax profits when the standard company tax rate is 30 per cent.
"We focus on what we must do and then we have a conscious decision not to do the rest," he said. "Because we prefer simplicity and efficiency and that gives us the ability to sell great quality products much more cheaply".