COMPETITION for the main supermarket chains has stepped up a gear as discount retailer Aldi unveiled a 65 per cent rise in profits and said its number of stores was set to rise to 1,000 over the next eight years as it increased market share in Britain.
The German brand said it had managed to change the psyche of British shoppers by offering “better products” at a lower price.
The rise of Aldi – and its rival Lidl – comes as a further blow to chains such as Tesco, Britain’s biggest retailer, and other “big four” chains Sainsbury’s, Morrisons and Asda, which have recently become embroiled in a bitter battle for market share.
Aldi, which is privately owned, said profits for 2013 had grown to £260.9 million, up from £157.9m.
The chain has become increasingly popular with middle class shoppers who turned away from high-end supermarkets such during the recession.
But experts say that the economic downturn has dramatically altered the retail landscape for good for discount brands such as Aldi.
Roman Heini, Aldi’s UK group managing director, said: “We keep prices constantly low while keeping product quality consistently high, which is exactly what shoppers want.”
Aldi – which was voted the UK’s top supermarket by Which? members in March this year – said it expected to open 54 stores in 2014, followed by up to 65 next year – taking the total to over 600. Tesco has more than 3,000 stores UK-wide, across its various brands including Tesco Extra and Tesco Express, while Morrisons has around 500.
Leigh Sparks, professor of retail studies at Stirling University, said Aldi’s success was a “structural change in retailing”.
“They are here for the long haul and are there to be powerful in terms of market share,” he said.
“I think it is a good thing for consumers, in that it adds more variety and having variety has upset the uniform way of doing things.”
Warwick business school professor of marketing, Lloyd Harris, said it was the “era of value” – pointing to “discount” ranges at top-end supermarkets, such as Waitrose’s Essentials.
“Could the results of Aldi reflect the start of a slow demise for the Big Four? It might just be,” he said. “If the market trends continue, the Big Four food retailers are going to find themselves squeezed.”
In its statement yesterday morning, Aldi cited data from market researcher Nielsen which said that in August this year Aldi attracted one million more shoppers than in the same period in 2013.
A Morrisons spokesman said the business, which recently reported a 51 per cent drop in underlying profits for the six months to August, was working to make its stores “easier to shop” and was “sharpening” service in response to a growing challenge from discount chains.
“Discounters offer a cheap alternative on some products but they still have a lot of work to do on their ranges, store standards, service and the integrity of their food,” he said.