Aldi to double London stores as price cuts dent profits

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Aldi has said it plans to more than double its store numbers in London as it moves forward with plans to open more smaller Aldi Local outlets.

However, the German discounter also said that operating profits fell by 26% to £197.9 million in the 2018 full year on the back of significant investment.

Aldi said profits slipped on the back of price cuts for customers and rising infrastructure investment.

Meanwhile, sales continued to surge as shoppers switch to the discounters, with annual sales across its UK stores rising 11% to £11.3 billion.

(PA Graphics)

The expansion is expected to create around 5,000 new jobs over the next two years, Aldi said.

It plans to increase its number of stores inside the M25 from 45 to 100 by 2025 as it opens new standard-sized and high street-focused Aldi Local stores.

The supermarket said it sees a significant growth opportunity in the capital, where it rolled out its first Local format in Balham.

It said the trial, which involved stores which were half the size of typical stores and stocked only 1,500 items, has “exceeded expectations”.

Giles Hurley, chief executive officer for Aldi UK & Ireland, said he believed the format could be rolled out to more than 50 sites across the capital, but is still to work out whether the format could be rolled out elsewhere in the UK.

Giles Hurley, CEO of Aldi UK & Ireland (Aldi/PA)
Giles Hurley, CEO of Aldi UK & Ireland (Aldi/PA)

He said: “We are somewhat protected from Brexit pressures because of our strong network of British suppliers. Around 75% of our products comes from British based suppliers and manufacturers.

“But I cannot say that there will be no possible shortages, as any other supermarket also can’t promise that.

“We have been seeking to find all the space we can for stockpiling and have built up stockpiles of ingredients such as chopped tomatoes and olive oil, which we source from Europe.”

Aldi said it is investing £1 billion over the next two years into its stores and distribution centres.

A new distribution site in Sawley, Derbyshire, is expected to open soon, with a further Bedford site in the pipeline.

Mr Hurley added: “Whilst our expansion will continue to reach every part of the UK, we’re increasing our focus on London, where our market share is just 3.4%, compared to 8.1% nationally.

“London shoppers regularly tell us they would switch to Aldi if there was one nearby, so there is clearly a significant growth opportunity for us in the capital.

“For almost three decades we’ve proven that investment equals growth – investment in our infrastructure, our people and our prices.

“The commitment we have made to our customers to continue investing in the UK over the coming years remains as strong as ever.”

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