Aldi invades inner cities

A few years ago, when Aldi UK opened a store in Manchester's city centre, the public opinion was that it was just a marketing trick: to open a hard discount store on such an expensive location could not be profitable. Now we know better: because of the economic crisis, the inner city stores are bringing in the biggest money.

Brilliant move

Aldi's new store in Queens (New York) is exemplary for the 'new look' Aldi in inner cities, says American retail expert Len Lewis. “New York is a fantastic market because of the high population density. The Queens store serves four times as many people as an average Aldi does. A marketing trick? More like a brilliant move!”

Not only Aldi, but also Lidl is keen on opening stores in such locations as Manchester city centre (like Aldi did) or the North London borough of Camden (like Lidl did). Retail expert Roberts points out that this is not a new evolution, but the internationalisation of an old strategy: “Although the typical Aldi location is on the edges of cities, several old Aldi stores have been built in city centres.”

Because of the current situation in the UK, where so many places in city centres and shopping centres are disused, this scenario is also possible there. Exactly the same economic situation that makes running a business in these locations so very difficult for most companies, makes it possible for hard discounters like Aldi to do so.

Two arguments in favour of city centres

High profile locations obviously cost more to rent, but Lewis sees two reasons why discounters should still consider opening stores there.  “Owners are more likely to lower their prices for respectable companies that are certain to pay the rent in time, than for a small store with a higher chance to go bankrupt.”

“The second reason is the very high population density in places like New York or Boston. These locations, while very expensive, have such a high number of shoppers – often inner city inhabitants who do not own a car – that these locations are still quite profitable. In the US, you have the example of dollar stores like Aldi's daughter Trader Joe's, who are very successful in both poorer city centre neighbourhoods and in the more expensive ones.”

There is however a big difference between the two Aldi chains. Aldi Nord (North Germany, Benelux, France, Spain and others) is much more conservative, while Aldi Süd (UK, Ireland, South Germany, Central Europe, Greece and the US) fully endorses this new policy.

- Pascal Kuipers, Alsano Communicatie

A few years ago, when Aldi UK opened a store in Manchester's city centre, the public opinion was that it was just a marketing trick: to open a hard discount store on such an expensive location could not be profitable. Now we know better: because of the economic crisis, the inner city stores are bringing in the biggest money.

Brilliant move

Aldi's new store in Queens (New York) is exemplary for the 'new look' Aldi in inner cities, says American retail expert Len Lewis. “New York is a fantastic market because of the high population density. The Queens store serves four times as many people as an average Aldi does. A marketing trick? More like a brilliant move!”

Not only Aldi, but also Lidl is keen on opening stores in such locations as Manchester city centre (like Aldi did) or the North London borough of Camden (like Lidl did). Retail expert Roberts points out that this is not a new evolution, but the internationalisation of an old strategy: “Although the typical Aldi location is on the edges of cities, several old Aldi stores have been built in city centres.”

Because of the current situation in the UK, where so many places in city centres and shopping centres are disused, this scenario is also possible there. Exactly the same economic situation that makes running a business in these locations so very difficult for most companies, makes it possible for hard discounters like Aldi to do so.

Two arguments in favour of city centres

High profile locations obviously cost more to rent, but Lewis sees two reasons why discounters should still consider opening stores there.  “Owners are more likely to lower their prices for respectable companies that are certain to pay the rent in time, than for a small store with a higher chance to go bankrupt.”

“The second reason is the very high population density in places like New York or Boston. These locations, while very expensive, have such a high number of shoppers – often inner city inhabitants who do not own a car – that these locations are still quite profitable. In the US, you have the example of dollar stores like Aldi's daughter Trader Joe's, who are very successful in both poorer city centre neighbourhoods and in the more expensive ones.”

There is however a big difference between the two Aldi chains. Aldi Nord (North Germany, Benelux, France, Spain and others) is much more conservative, while Aldi Süd (UK, Ireland, South Germany, Central Europe, Greece and the US) fully endorses this new policy.

- Pascal Kuipers, Alsano Communicatie

Questions or comments? Please feel free to contact the editors


LVMH acquires Dior

25/04/2017

French luxury group LVMH has agreed to acquire fashion brand Christian Dior’s final 26 %. In return, it will pay 12.1 billion euro.

Jimmy Choo is looking for a new owner

24/04/2017

Shoe brand Jimmy Choo put itself up for sale after a deal with investor JAB, which currently owns 70 % of shares.

H&M wants clothing to become recyclable by 2030

24/04/2017

At the H&M Foundation-organized Global Change Awards, Karl-Johan Persson, Swedish fashion company’s CEO, said all of the group’s clothing should be fully recyclable by 2030.

Profit alert for lingerie manufacturer Van de Velde

20/04/2017

Belgian lingerie manufacturer Van de Velde, best known for its Marie Jo and PrimaDonna brands, expects its 2017 financial results to come under pressure. The company immediately announced additional investments to stimulate growth.

Primark only achieves growth through store openings

19/04/2017

Irish fashion chain Primark has seen its turnover grow more than 20 % in the past six months, but that was only thanks to new store openings and positive exchange rate fluctuations.

C&A launches 'cradle-to-cradle' collection

19/04/2017

Fashion chain C&A is launching a "Cradle to Cradle Certified Gold" t-shirt collection in June. These can be entirely recycled or reused and C&A says the shirts can even be thrown on the compost heap.

Back to top