“Watch out BigLaw, Aldi’s here.”

by Katherine Thomas

What established law firms have in common with Coles and Woolworths (you’ll be surprised!)

So, the big news in WA last week was the arrival of Aldi, with four stores across Perth and an intention to open 12 more by the end of the year.  Believe it or not, this was headline news on local radio and Premier Colin Barnett braved the cold to make it down for the opening of the Kwinana store.

“Game-changer” said the headline in PerthNow, “challenging the duopoly in WA” said WA Today and the Facebook group ‘ALDIholics’, well, they were beside themselves with excitement.

One may scoff at the level of interest this generated in WA (the “wait awhile” state), but deeper consideration highlights the truly transformational nature of Aldi’s arrival for the grocery sector in the state.  For years, it has been dominated by Coles and Woolworths which, between them, account for over 70% of the market.  I’ve only lived in WA for 6 months, but, believe me, I already know that it’s difficult to avoid these big beasts if you’re shopping for a family of five.  Even I’m excited about the arrival of Aldi and what this signals for the over-priced, complacent duopoly in WA.

Since arriving on Australia’s east coast in 2001, Aldi’s market share has grown to 11% and analysts predict 5-6% growth in the short-to-medium term: double that predicted for the established brands.  Why have Aldi been so successful?  What do they do so well?

When Aldi entered the UK grocery market in 1990, it was a small player, scoffed-at for being low-grade, cheap in all senses of the word and certainly not the place your average consumer would visit.  Roll forward 26 years and Aldi has 5.6% of this competitive and mature market and the two ‘discounters’, Aldi and Lidl together take a 10% share, above Waitrose, Co-Op and only just behind Morrisons.  Aldi was ahead of its time when it arrived.  Consumer attitudes and cultural norms did not accommodate such a low-priced, no-frills retailer within the mainstream.  And then the GFC happened.  Before I left the UK in 2015, over 30% of the cars outside my local Aldi were premium German brands.  Need I say more?

It doesn’t take much imagination to see the comparison here between established law firms and new propositions entering the legal market.  The Lawyers Weekly article ‘Great Expectations’, suggesting that the reality of NewLaw’s achievements so far don’t meet its hype could be seen as an equivalent to the ‘scoffing’ of the chattering classes when Aldi opened in the UK all those years ago.  Parallels can be drawn between the ‘same old, same old’ pronouncements about size, quality, longevity and strength-in-depth by traditional law firms and the messages coming from the duopoly of Coles and Woolworths.  Big law firms’ mis-use of the terms ‘innovation’ and ‘agile’ to describe minimal changes in the status quo don’t seem far removed from the cloudy, unspecific comments from Wesfarmer’s CEO last week.

Traditional law firms: there is still time to adapt and change before it’s too late.  Your client bases, brand strength and infrastructure are assets that NewLaw can’t match for now.  So, combine this with client-centred, frank, uncomfortable and honest thinking, to develop new ways of delivering legal services that clients value and your competitors do not understand. 

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by Katherine Thomas

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