Aldi has revealed that sales in its UK & Ireland division jumped 15.5% to £17.9bn over the 12 months to December 2023 – its highest-ever period of sales growth after attracting more shoppers during the cost of living crisis and continuing with its store expansion programme.
Meanwhile, the company’s pre-tax profit surged from £152.6m to £536.7m, driven by the strong sales combined with greater efficiencies across its stores and central functions compared with the prior year. Reported operating profit increased from £178.7m to £552.9m, representing a margin of 3.1%.
In more recent times, Aldi has suffered a rare reverse in market share after the supermarket multiples stepped up their efforts to win back shoppers from the discounters. The most recent Kantar data shows Aldi’s market share in the UK now stands at 10.0% compared to 10.2% last year.
Nick Bubb, an independent retail analyst, commented: “There has been a lot of focus recently on the weak sales figures reported for Aldi UK by Kantar and Nielsen, but it sounds like the business itself has been concentrating on its bottom-line performance.”
Clive Black, head of consumer research at Shore Capital, added: “We see Aldi as a very effective supermarket operator, the disrupter of the 2010s in the British grocery scene, which is not going away, clearly, but is maturing and so [is] a more rational player in the big scheme of things.”
Aldi has been working hard to reinvigorate its sales performance, investing almost £100m in over 300 price cuts in the last three months. And it launched a major TV ad campaign, poking fun at competitors attempting to ‘price match’ its products.
The retailer is also accelerating its expansion across Britain. It plans to open 23 new stores before the end of the year – marking a record £800m annual investment and a £1.4bn two-year programme. It is also refurbishing 100 existing sites during 2024, expanding its network of distribution centres, and updating its technology infrastructure. Aldi, which currently has over 1,020 sites, has previously stated that it wants to reach 1,500 stores in the UK.
“British shoppers are voting with their feet and choosing Aldi as their first-choice supermarket. We’re responding with our biggest ever annual investment in Britain,” said Giles Hurley, Chief Executive Officer for Aldi UK and Ireland.
“For every £1 of profit generated last year, we’re investing £2 this year – opening more stores and building the supply infrastructure to bring high-quality, affordable groceries to millions more families the length and breadth of Britain.
“We’re also investing at record levels to cut prices, reward our amazing colleagues and support more causes in our local communities. All while creating thousands more jobs and even more opportunities for our growing base of British suppliers and farmers.”
Meanwhile, he noted that some customers were starting to trade up to premium products, including Wagyu steak, premium cheese, ready meals, and brioche buns, as cost of living pressures ease.
“It’s still tough out there for millions of families, but inflationary pressures are easing for some,” said Hurley. “For others, it’ll be a decision not to use hospitality but to celebrate at home instead.”
He concluded: “As we head towards the Christmas trading period, we’re all set to launch our biggest and best-ever seasonal range, including hundreds of premium range products at unbeatable prices for our customers.”
NAM Implications:
- Still a great price story at Aldi…
- …in terms of perception and actual.
- And consumers that discover Aldi in a downturn…
- …tend to remain loyal as conditions improve.
- i.e. Don’t take the bets off yet…
