Aldi UK invests record-sum in store expansion

By: Rennack Sebastian Date: 2024. 09. 10. 09:11

Aldi in the UK announces a record £800 million (€ 928 million) investment in its store network. Last year, Aldi’s net sales grew by a historically high 16%, more than twice the rate of food inflation. Thanks to efficiency gains pre-tax profits have tripled. The strategic move is among others aimed at increasing its lead over discount rival Lidl.

Photo: Aldi UK

Aldi is set to accelerate its store expansion in the UK. The German discounter has earmarked a record £800 million (GBP, € 928 million) for annual investment in its store network. By the end of the year, Aldi plans to open 23 new stores in the UK. At the same time, 100 of Aldi’s current 1,000-plus stores will be converted to its latest store concept. Aldi had previously announced plans to expand its operations to 1,500 stores across the UK.

According to Aldi, net sales increased by £2.4 billion to £17.9 billion (€20.8 billion) in the last financial year. The 16% increase is more than double the rate of inflation for food and non-alcoholic beverages, which was 7% over the same period, according to the Office for National Statistics. Last year’s pre-tax profit more than tripled to £537m (€ 623 million) from £153m (€ 177 million), giving a pre-tax margin of 3.0%. The company cited efficiencies in stores and central functions as the main reason for the positive performance.

Giles Hurley, CEO of Aldi UK and Ireland, said:

‘For every £1 of profit we made last year, we’re investing £2 this year – opening more stores and building the supply infrastructure to bring high quality, affordable food to millions more families up and down the UK.

Photo: Aldi UK

With this move, Aldi aims to increase its lead over arch-rival Lidl. According to Kantar Worldpanel data for 2023, Lidl has been growing its market share faster than Aldi. Over the full year, Aldi increased its share from 9.1% to 9.3%, while Lidl’s share grew from 7.2% to 7.7%. Lidl’s gains came almost exclusively from existing outlets. As a result of cost-cutting measures and a generally more cautious expansion policy across the group, the discounter expanded its UK store network only from 962 to 964 at the end of February.

Since the beginning of the year, Aldi seems to have regained momentum. While Kantar data shows that Lidl gained 0.4 percentage points of market share between January and August, Aldi gained 0.7 percentage points to 10.0%.

British consumer organization Which? has named Aldi the UK’s cheapest grocer for eight consecutive months this year in its monthly basket comparison of the six largest food retailers.