Positive results from Aldi’s UK operations are a sign that the discounter’s further expansion into the British market is progressing well, GlobalData has noted.
Eleanor Simpson-Gould, senior retail analyst at GlobalData, was commenting following the publication of full-year results for Aldi UK, which indicated that the discounter saw its sales rise to £15.5 billion (€17.8 billion) last year, while operating profit rose to £178.7 million (€205.4 million).
“Aldi’s market share of the UK food-and-grocery sector has achieved the strongest growth of all major supermarkets in recent years, accelerating from 6.8% in 2021 to 8.4% in 2023,” Simpson-Gould said. “The threat of further market share losses across the incumbent Big Three looks unlikely to diminish any time soon, with Aldi having knocked Morrisons out of the top four leading supermarkets in 2022.”
As she added, the retailer’s results showcase the strength of its proposition, as well as its ability to maintain its value proposition, even in an inflationary market. Aldi has pledged further price cuts this Christmas, as well as a £1.4 billion investment in its operations over the next two years, in both new and future stores, as well as the expansion of its distribution network.
Aldi has had a presence in the UK since 1990. It recently opened its 1,000th outlet in the country and is targeting a total of 1,500 stores.
‘A Winning Formula’
“Aldi’s strategy focus on the offline market has been a winning formula for FY2022, enabling the discounter to maintain a low-cost model and compete harder on price,” said Simpson-Gould.
“Whilst Tesco and Sainsbury’s have invested in e-commerce platforms to gain traction in ultra-fast delivery and convenience formats, Aldi’s brick-and-mortar refocus has benefitted from drastic changes in consumer behaviour in 2022, as online sales declined and consumers traded down for essentials, reduced dining-out expenditure and purchased in lower spends, but higher frequency.
“With 36.8% of shoppers continuing to switch to Aldi for food and grocery shopping in September 2023 versus 36.6% during December 2022, and food inflation beginning to decline, Aldi must not rest on its laurels to retain its newfound customer base.”
Looking ahead to the remainder of the year, Simpson-Gould added that, in order to drive future share growth, Aldi must adopt a “multifaceted” strategy, improving its fresh-produce offering, expanding self-checkout, and investing in innovative product launches.
“Whilst the discounter has previously reduced investment in e-commerce to focus on price, online sales in the UK food-and-grocery sector are estimated to grow [by] 7.1% in 2024 [and] click-and-collect and speedy delivery functions will be increasingly sought-after options,” she added.