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The Impact of Music in Supermarkets: A Comparison of Aldi, Coles, and Woolworths
When shopping at Australian supermarkets like Aldi, Coles, and Woolworths, customers notice a similar layout: pushing a cart down aisles filled with products. However, a significant difference lies in the auditory experience. Unlike Coles and Woolworths, Aldi chooses to operate its stores without background music, a decision that is not expected to change soon.
The Cost of Music Licensing
In Australia, businesses wishing to play music must acquire a license due to copyright laws that protect musicians and artists. Failure to comply can result in penalties for copyright infringement. The Australasian Performing Right Association (APRA) and the Australasian Mechanical Copyright Owners Society (AMCOS) offer licenses, and over 100,000 businesses subscribe to these services. In 2022 alone, APRA AMCOS distributed approximately $132 million in royalties to artists from businesses that played their music.
The cost of obtaining a music license depends on the size of the business and the type of system used to play the music. For supermarkets, annual fees range from about $97 for small spaces using radios, to over $6,000 for larger spaces that utilise digital streaming services. For Aldi, licensing fees vary between $230 and $1,600 per year per store, which could be significantly lower than Coles’ and Woolworths’ potential fees.
Financial Implications
Coles and Woolworths have around 850 and over 1,100 locations respectively. If each supermarket paid the maximum licensing fee, collectively they could be spending between $5.1 million to $6.6 million on music annually. This substantial expenditure raises questions about whether these costs ultimately impact grocery prices.
Interestingly, studies show that music can influence consumer behaviour profoundly. A recent study indicated that background music could boost customer spending by 8% in retail environments and 5.4% when dining out. For instance, with an 8% increase in revenue, Coles could generate an additional $3.48 billion, while Woolworths could see a boost of $5.43 billion, more than offsetting their music licensing costs.
Psychology of Shopping with Music
Research indicates that background music alters shopping behaviour. A study from the University of Bath found that grocery bills could rise by 10% as customers shop from Monday to Thursday, when they might be more rushed and less attentive to their spending. Dr Carl-Philip Ahlbom noted that music can have a calming effect, making shoppers more likely to spend.
Furthermore, the type of music played also affects purchasing decisions. Historical experiments have shown that when classical music is played, customers tend to buy more expensive items, whereas more practical purchases dominate when pop or country music is playing.
Additional research demonstrates that specific genres can steer shoppers toward products associated with certain musical styles. For example, French music increased sales of French wine, while German music had the same effect on German wine. Remarkably, shoppers often remained unaware of the influence music had on their choices.
Influence on Store Loyalty
Customers appear to prefer shopping environments with music. Data shows that 21% of customers are likely to recommend a store that plays music, and 31% are more likely to return. Up to 90% of UK shoppers reported a preference for stores that feature music.
Catherine Giuliano, a director at OneMusic, argues that Aldi’s decision to eschew music could be a missed opportunity for growth. She asserts that the atmosphere created by music enhances customer retention and satisfaction, which can yield benefits that far exceed the cost of a OneMusic license.
Aldi is positioned as a cost-effective shopping option but might reconsider their approach if they wish to boost customer spending further.
In conclusion, while Aldi may currently forego music to minimise costs, adopting this strategy could potentially enhance customer experience and increase revenues significantly, further aligning itself with trends seen in its competitors, Coles and Woolworths. As customers continue to seek pleasurable shopping encounters, the role of music might prove crucial for all supermarkets in fostering loyalty and driving sales.
