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Aldi Plans £300 Million U.K. Store Makeover To Keep Up Pressure

Published on Sep 26 2016 8:48 AM in Retail tagged: Featured Post / UK / Aldi / Tesco / Asda / Makeover

Aldi Plans £300 Million U.K. Store Makeover To Keep Up Pressure

Aldi’s U.K. business said it will spend 300 million pounds making over its stores next year as it continues to ratchet up the pressure on Britain’s mainstream grocers.

Outlets will be given a new format aimed to emphasize product quality and offering more refrigerator space for fresh goods, the German discounter said in a statement Monday, also disclosing that its rising sales have been at the expense of lower earnings.

Aldi and rival German discounter Lidl have wreaked havoc within Britain’s grocery industry over the last three years, winning favor with shoppers as they cast aside stereotypes of being dark outlets where only low-income people would shop. The reformatted stores will seek to address customer requests for easier access to products such as fresh produce, meats and fish, the company said. Aldi also plans to open another 70 new outlets next year, keeping it on track to have 1,000 across the country by 2022.

“We’re doing what I have always said we would do -- investing our margin to maintain a significant price advantage over our competitors,” Matthew Barnes, chief executive officer of Aldi U.K. and Ireland, said in the statement. The retailer has spent about 1.7 billion pounds over the past five years on its U.K. store expansion.

Aldi said it has cut prices on 30 percent of its U.K. products so far this year, attracting shoppers, but weighing on earnings. Sales in 2015 increased 12 percent to 7.7 billion pounds, while operating profit fell 1.8 percent to 255.6 million pounds, the second straight drop.

Having doubled revenue in three years, Aldi said 13.9 million U.K. households now shop at its stores. Its share of Britain’s grocery market has risen to a record 6.2 percent as the country’s big four supermarkets -- Tesco Plc, J Sainsbury Plc, Wal-Mart Stores Inc.’s Asda and Wm Morrison Supermarkets Plc -- have all seen their market share dwindle.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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