Aldi to take on its big rivals

Aldi has outperformed the grocery market

The discounter, which has outperformed the grocery market by undercutting rivals’ prices by around 15 per cent, is keen to tap into growing demand for its stores as inflation rises and the weekly shop becomes more expensive.

Aldi’s chief executive Matthew Barnes said the group could see some British towns house up to eight Aldi stores, piling further pressure on its more established rivals.

“If you look at the population, we think not only could we have a store in every town and city, but for every 25,000 to 30,000 people,” he said in an interview with industry magazine The Grocer.

Aldi currently has 700 British outlets.

Aldi said it is well on track to meet the group’s ambitious targets by opening up to 70 stores a year and said it may exceed these targets.

There are around 600 town and city locations where Aldi doesn’t have a store and could open one or more stores, offering the group a massive opportunity to expand.

Mr Barnes said the group could have close to 1,300 stores by 2022.

“We have 700 stores now and 300 sites already approved on our books.

“And there are 600 town locations where we don’t have a store; in many of which we could easily have two, three or four stores ... We don’t have a store in Watford, (but) that would be a six to eight Aldi town.”

The emergence of Aldi and its fellow German grocer Lidl has shaken up the grocery sector’s so-called Big Four - Tesco, Sainsbury’s, Asda and Morrisons - which remain locked in a bitter price war sparked by the discount duo.

Soaring inflation linked to the Brexit-hit pound is expected to see British consumers turn to cheaper options this year, providing a further boost for the discounters.

At the same time there are worries about crop harvests, which could hike up prices.

Figures out last month from Kantar Worldpanel showed that Aldi and Lidl hit record high market share and now have a collective 11.7 per cent share of the market.

Kantar said that Aldi and Lidl are set to benefit as more shoppers switch to the discounters.

Both firms hit record high market shares.

Lidl’s sales rose 15 per cent over the 12 weeks to February 26 while Aldi saw a 14.3 per cent rise, although both have been boosted by new store openings.

“Aldi and Lidl are set to do well. They are opening more stores and they are not anywhere near saturation level,” said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

Lidl and Aldi attracted an additional 1.1 million shoppers between them over the 12 week period.

Mr Barnes said: “As inflation begins to stretch household budgets consumers will increasingly look for opportunities to reduce their grocery bills.

“Our model means that we can continue to offer our customers outstanding value for money and guarantee the prices they pay for great quality groceries are the lowest in Britain.”

In February Aldi overtook the Co-operative to become Britain’s fifth largest grocer, according to data from Kantar Worldpanel.

Fraser McKevitt at Kantar Worldpanel said that it is inevitable that retailers will raise prices following the fall in sterling.

“Retailers have held off for some time, but (currency) hedges have expired and retailers are passing on higher prices,” he said.

“We think inflation will settle at around 3 per cent. It won’t be the double digit inflation we saw before although the political landscape could change.”