Aldi UK & Ireland saw another strong rise in sales last year, although its profits fell slightly due to tough price competition and higher costs. The figures were released alongside a pledge by the discounter to invest a further £1.3bn over the next two years (2022-2023) to support its growth plans.
Aldi’s sales across the two countries grew 10.2% to £13.53bn in the year to 31 December 2020, despite being unable to fully capitalise on the online shopping boom during the period. Pre-tax profits slipped 2.5% to £264.8m, which the retailer stated was due to its continued investment in price and the cost of responding to the pandemic. Aldi, which has over 920 UK stores, claimed it made price reductions worth £238m last year.
The grocer also highlighted that it had repaid the full amount it received in business rate relief, following in the footsteps of rivals such as Tesco, Morrisons, and Sainsbury’s.
Meanwhile, its investment plans include the opening of 100 new stores across the UK over the next two years, as well as expanding its logistics infrastructure, including a new 1.3m sq. ft. site in Leicestershire. This is expected to create more than 2,000 new jobs next year.
Further investment is being made in Aldi’s click & collect service that launched last year (now in 200 stores) and technology initiatives. This includes trials of its new checkout-free concept store in Greenwich, London, which will use a system of cameras, sensors and artificial intelligence to identify the items shoppers take from shelves, alleviating the need to go through a checkout.
Giles Hurley, Chief Executive for Aldi UK & Ireland, said the business had experienced “some of the most difficult conditions our sector has ever seen” over the year.
He added: “As well as delivering record sales, we continued to invest for growth, deploying over £600m in stores and distribution centres across the UK. This helped to create thousands of much-needed jobs and support for British farmers and manufacturers.
“Whilst the cost of responding to the pandemic dampened profits, our decision to return business rate relief was the right thing to do.”
Meanwhile, commenting on the current supply chain crisis, Hurley stated that Aldi was well placed as regards product availability for the key Christmas period, mainly because it sells fewer products than its Big Four rivals.
“At the moment from everything we know we’re in a good position,” he said.
“I’d always come back to the fact we have a more refined range than our competitors, we simply have less products to control, to supervise, to manage and I think that just gives us that unique competitive advantage.”
Hurley added nobody in the market can guarantee there would not be inflation in the market around Christmas. “What I am able to guarantee is that customers will always get the lowest prices in Aldi irrespective of what the future holds.”
Aldi also highlighted that it had spent an extra £1bn with UK companies last year, taking its total to £9bn as part of a commitment to buy British wherever possible. It has also reformulated around half of its range this year to improve product quality, whilst introducing hundreds of new products to meet changing consumer tastes.
NAM Implications:
- Aldi ticks all the boxes re lockdown refunds, auto-checkout, local sourcing, online, keen prices…
- i.e. getting closer to the UK public.
- Are you getting close enough to Aldi?
