Aldi, the German supermarket group grew sales by 14% in the last year although overall profits margins fell as supermarket price wars continue. Aldi also announced that they plan a £300 million revamp of 100 stores as well as aiming to increase their total number of stores from 659 to 1,000 by 2022.
Aldi, along with Lidl are an interesting business model. At a time that the big four Supermarkets are facing increasing competition online with the likes of Ocado and Amazon competing for their business, the budget supermarkets are stealing the show with their no frills and less choice approach.
It is interesting in a world where consumers are shopping more and more online, that a supermarket can succeed offline. Most Aldi customers don’t even appear to have realised that, with the exception of groceries, you can actually buy from Aldi online – both wine and their special buys can be found on their website.
While the country was in recession shopping at budget supermarkets stopped being looked down on and even became fashionable as new customers raved about their prices. It will be interesting to see how this trend continues as the economy improves (although with Brexit on the agenda who knows what will happen).
Amazon are perhaps the biggest disruptor starting to attack the supermarket sector and they’re competing on branded goods and price. Serving around 30% of the UK population, they only currently operate their same day business in large urban conurbations. Expanding out to the suburbs and country towns is likely to take much longer than adding a few cities to their distribution network.
Currently the way is way clear for budget supermarkets to corner the market and expand and that’s what they appear to be doing. The big four supermarkets are having to face losing their budget conscious customers to Aldi and Lidl and their convenience customers to Amazon.
It’s nice to hear of a German company with the intentions to aggressively expand and invest in jobs in the UK. So much for brexit supposedly restricting our european friends from investing in the UK. Well done Aldi!
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