Aldi UK Sees 13% Increase In Sales, But Profits Continue To Fall
Discount retailer Aldi has announced that sales in the UK and Ireland went up by 13.5%, to £8.7 billion, in its 2016 financial year.
The retailer, which operates 726 stores in the UK, says that growth was driven by over one million new customers switching to Aldi last year.
Aldi is planning to open 23 new stores in the UK in the final three months of the year, while a further 70 stores are planned for 2018, as part of the retailer's plans to reach 1,000 outlets by 2022.
However, this rapid expansion plan has affected the supermarket chain's profits, as last year saw operating profit decline by 17%, to £211.3 million.
“Our growth is accelerating, thanks to the hundreds of thousands of new customers switching their shop to Aldi," said Matthew Barnes, CEO of Aldi UK and Ireland.
"This is happening right across the UK, and is all down to a simple, straightforward commitment: products comparable to the leading brands and supermarket premium ranges at the lowest prices in Britain," said Barnes.
The latest figures from Kantar Worldpanel reveal that Aldi is currently the fifth-biggest supermarket in the UK, with 7% market share, however, it saw sales rise by 15.6% in the most recent period.
Additionally, a recent report showed that the retailer contributed to the generation of more than £8.5 billion to the UK economy, through a combination of job creation, spending with British-based businesses, tax contributions and capital investment.
“These results and our strong performance during 2017 mean we are confident and excited about our future plans," added Barnes.
The German discounters, Aldi and Lidl, have seen strong increases in market share in recent years, offering consumers a distinct alternative to the Big Four supermarkets.
“With UK shoppers showing signs of becoming more cautious about their spending, either because of price increases or concerns about the impact of Brexit, the discounters are well placed to help shoppers limit spending," said Danielle Pinnington, managing director at research agency Shoppercentric, “but the success of the discounters does mean shoppers are starting to expect more from them – quality products, better store environments, etc. – and these factors cost, as Aldi’s figures show.
“The level of investment by Aldi may well have hit profits, but it demonstrates their confidence in the continued appeal of their proposition,” added Pinnington.
Last week, Aldi UK was voted the nation's favourite supermarket at the 2017 Good Housekeeping Food Awards.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.