Aldi steps up expansion despite profits squeeze

Discount retailer Aldi is moving into online sales and accelerating its store opening programme despite supermarket price wars taking their toll on profits.

Aldi has signaled a move into online sales and the desire to open more new stores. Picture: John Devlin
Aldi has signaled a move into online sales and the desire to open more new stores. Picture: John Devlin

It came as the group, which employs 2,200 staff in Scotland, revealed that revenues in 2014 surged 31 per cent to £6.89 billion, though operating profits fell 4 per cent to £260.3 million.

Analysts said the firm’s move into online sales would be an added headache for more established rivals.

Aldi also said it was to increase its rate of new store openings, with 65 sites due to open in the current year, up from 54 in 2014.

The company said it was planning to launch an e-commerce website to sell wines by the case from early next year, followed by non-food in the spring.

Customers will be offered a home delivery option, as well as collection from other locations. The supermarket said the move formed part of its “long-term growth and investment strategy in the UK”.

Chief executive Matthew Barnes said Aldi was maintaining a price gap of at least 15 per cent with rivals on an average basket of goods, and offering high quality, driving customers to return “time and time again”.

He added: “Our launch online is another exciting chapter in our story. This will enable us to introduce the Aldi brand and some of our best-selling, best-quality and best-value products to thousands more customers.”

Aldi and fellow German discounter Lidl have seen surging British sales in recent years, gnawing away at the market share of more established rivals Tesco, Sainsbury’s, Asda and Morrisons, prompting a ferocious price war that has ­hammered sales and profits at the big four.

The latest surge in Aldi’s sales represented an extra £31m in sales revenue every week in 2014, it said. The company, which opened its first UK store in 1990, said it had more than doubled sales in the past three years alone.

It said its £2bn balance sheet would underpin continued investment. The retailer said it created 7,000 jobs last year, and currently employs 28,000 people. The group now operates 598 stores in the UK and said it remains on course to achieve its target of 1,000 by 2022, recruiting 35,000 more staff.

Barnes said: “The past 25 years has been an incredible journey for Aldi in the UK. During that time, the grocery market has changed beyond recognition – and changed for the better. We’re hugely excited about the enormous scope for growth over the next 25 years.”

But Julie Palmer, partner at consultancy Begbies Traynor, said the disappointing profits “show that even Aldi can’t escape the clutches of the ongoing supermarket price war”.

She added: “As its bigger rivals have committed to investing billions of pounds worth of price cuts over the next few years, Aldi has been forced to react in kind.”