Aldi has pledged to invest a record £1.3bn in expanding and upgrading its operations after seeing bumper sales and profit growth last year.
The plan will see the discounter open around 100 new stores across the UK over 2020 and 2021 in line with its long-term target of 1,200 outlets by 2025. A further 100 stores will be revamped under its ‘Project Fresh’ initiative.
Other investments include new and expanded distribution centres and the roll-out of its click & collect service which was launched to the public last week following a trial with staff.
Aldi, which celebrates its 30th anniversary in the UK this year, revealed its plans alongside a trading update covering the year to 31 December 2019. This showed its sales in the UK and Ireland had risen a healthy 8.3% to £12.28bn, driven by a 6% increase in customer numbers to 17.6m. Aldi also pointed to more recent Kantar data showing its UK sales growth was currently running at around 10%, with shopper numbers now more than 18m.
Having seen a drop in profits in 2018, this year’s operating figure jumped 49% to £291.2m. Pre-tax profits were up by the same percentage to £271.5m. The group attributed the growth to an improvement in margins as efficiencies of scale offset investment in prices.
Looking ahead, Aldi said its most important commitment to customers was to continue to keep its prices the lowest in the market as household budgets come under greater pressure during the coronavirus crisis. It pointed to recent research from The Grocer magazine which showed a basket of 33 everyday items at Aldi is on average 14% cheaper than the Big 4 supermarkets.
Aldi also highlighted that it had reformulated around half of its range to improve product quality this year whilst introducing hundreds of new lines to meet changing consumer tastes. The discounter, which sources its entire core range of fresh meat, eggs, milk, butter and cream from British suppliers, said it had spent an extra £1bn with UK companies last year taking its total to £8bn.
Giles Hurley, Chief Executive Officer for Aldi UK and Ireland, said: “For over 30 years, our success has been driven by the ever-increasing number of shoppers who put their trust in Aldi every time they shop with us. This is what enables us to keep investing in Britain – in our products, our prices, our people and in the communities we serve.
“The founding principle of our UK business back in 1990 was to offer a carefully-selected range of great quality products at the lowest prices. Whilst we’re continuing to innovate to give customers an even better experience and greater convenience, our core philosophy remains unchanged.
“With the UK’s economic outlook increasingly uncertain, families are more concerned about their grocery bills than ever. We’ve seen before that our customers need us most in times of financial hardship, which is why our commitment to remain Britain’s lowest-priced supermarket is more important than ever.”
NAM Implications:
- For context:
- Aldi has 18m customers vs 28m UK households.
- Has to count for something…
- Just 30 years in a market that was too sophisticated for ‘limited range’ discounters…
- An economy of continuing uncertainty just made for Aldi (and Lidl)…
- Your call…
