Over the next two years, a new Aldi is to open almost every week in Great Britain. The fast-growing discounter wants a hundred more new stores.
Challenger gains ground
Aldi Süd has launched an offensive on the British market: the supermarket chain is investing a further billion pounds in the opening of one hundred new branches. The plan is for these to be in place within the next two years, meaning a new Aldi will open its doors about every week, creating 5,000 new jobs for British workers.
Discounters Aldi and Lidl have been making strong headway in Britain for years. Today, Aldi Süd has 840 stores and the German supermarket chain is the fifth largest market player, although the ‘big four’ competitors are slowing down in terms of growth.
Tesco, Sainsbury’s, Asda and Morrisons can see that the expansion ceiling has almost been reached, with their market shares falling in favour of the German challengers. In particular after the end to the merger between Sainsbury’s and Asda (numbers two and three in the market), it is proving a real challenge for ‘indigenous’ retailers to find areas for new growth.
Half of all British people
When it comes to Aldi, however, that same ceiling seems to have disappeared. British CEO Giles Hurley has told the BBC that the chain only reaches half of the British population, and that is mainly due to a lack of local stores. By 2025, Hurley wants to have 1,200 branches and in the London region in particular, the discounter is still seeing a lot of growth potential: by the end of 2025, they intend to increase the number of stores there from 45 to 100.
In the long term, this could be as high as 200 or 250. Aldi’s market share in the capital is currently only half of the national average, and so the chain is experimenting with smaller local branches that function more as local convenience stores.
At the expense of profit
However, the expansion offensive is likely to also mask a decline in profit in the UK. Although the chain attracted 800,000 new customers and 11% more turnover last year, profits still fell by 18%, with the discounter feeling that pressure on margins and their aggressive pricing policy is taking its toll.
“Our profits did indeed suffer from the investments made, but Aldi is not like other supermarkets”, said Hurley to the BBC. “We look at our business operations in the very long term and so our focus is very much on our turnover, our customers and the number of stores – not on short-term profitability.”
