Discount supermarket chain Aldi plans multimillion-pound UK expansion after luring more middle-class shoppers into its stores.
The discount supermarket chain Aldi plans to create 4,500 jobs in Britain in a multimillion-pound expansion that will see it break through the 500-store mark.
The German retailer is back in the black after attracting more cash-strapped middle-class shoppers, making a pretax profit of £57.8m in 2011 compared with a loss of £56m the year before. Turnover grew by nearly 30% to £2.76bn.
It increased its market share in June by 54% compared with the same month last year, taking a 4.1% slice of UK grocery spending, according to the data firm Nielsen.
Last year, the budget grocer opened 29 stores in Britain and has earmarked £181m for 40 stores by the end of 2013, taking its total UK stores to more than 500.
Aldi has focused on working with a growing number of suppliers in Britain to offer more fresh food, and sources two-thirds of its core range from UK suppliers. Sales of fresh meat doubled, fruit and vegetables sales climbed 48% and bakery sales are up 40%.
"The success of Aldi comes as no surprise," said John Pal, retail analyst at Manchester Business School. "This is, after all, the German retailer that saw off the world's largest retailer, Walmart, in its home country a number of years ago.
Despite the rather derogatory comments about Aldi and other limited-line discounters' entry into the UK in the 1990s by the likes of senior Sainsbury executives, it is clear Aldi in particular has found favour with UK consumers. But operating in the value end of the market is no guarantee of success as Kwik Save, Shoprite and Netto have found out."
Pal credited Aldi's simple TV adverts, special weekly deals and limited choice, along with an adherence to a standard store footprint that can fit into smaller centres.
Figures from Nielsen showed Aldi enjoyed 39% sales growth in the four weeks to 15 September, helped by the feelgood factor lingering from the London Olympics and the mini heatwave in the first couple of weeks of September. Sales at the market leader, Tesco, were disappointing, up just 1.4%, while Morrison's sales fell for the first time this year, by 1.3%. Waitrose and Sainsbury's recorded sales growth of 7.5% and 5.6% respectively.
Aldi's joint managing director, Roman Heini, said: "Consumers are attracted to Aldi by our brand-matched quality products and keep returning to our stores when they realise their weekly shop can cost around a third less than in the big supermarkets. Aldi has become more relevant to British consumers. They can buy what they need and want at Aldi, at a price they like."
Pal said the worry for the big four - Tesco, Sainsbury's, Asda and Morrison's - is that they may not be able to entice customers back when the good times return.
Source: 1st October 2012, The Guardian, Julia Kollewe
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