Aldi and Lidl dig deeper into Britain’s grocery market

LONDON (Reuters) – German-owned discount supermarkets Aldi and Lidl are plowing ahead with a rapid expansion in Britain and are on course to grab more market share from the traditional big four players.

A top Aldi [ALDIEI.UL] executive told Reuters it aimed to have 1,000 UK stores by 2022, up from its current 762 while Lidl said it sees potentially 1,200 to 1,500 stores in the long term, up from 710.

Meanwhile, store openings at market leader Tesco <TSCO.L>, Sainsbury’s <SBRY.L>, Asda <WMT.N> and Morrisons <MRW.L> have slowed to a trickle. They are shedding thousands of jobs so they can save money and better compete with the discounters.

Aldi and Lidl’s cut-price model have turned them into two of the world’s biggest retailers. They have expanded abroad as growth stagnated at home.

Aldi launched in Britain in 1994 and Lidl in 1990 and they have changed the shape of the UK grocery market.

But their profits have fallen and traditional retailers have questioned whether the model is sustainable. The discounters also have little presence online and could face competition there from the big four and grocery newcomers such as Amazon <AMZN.O>.

For now, Aldi and Lidl’s combined share of the 200 billion pound ($283 billion) UK grocery market is set to grow. It will be 15 percent by 2020, up from 12.1 percent currently, according to Ashley Anzie, strategic insight director for grocery at researcher Kantar Worldpanel.

„That’s largely driven by the fact that Aldi and Lidl will just physically be opening more stores,” he said.

Aldi and Lidl are also modernizing existing stores and making a push into premium ranges that chimes with British shoppers, who, squeezed by inflation and subdued wages growth, have become more cautious in their spending.

„What we’re doing is investing very carefully in things that add to our customer offer, our store portfolio, our infrastructure,” Jonathan Neale, Aldi Managing Director Buying, told Reuters.

Aldi’s 1 billion pounds investment program to the end of 2018 will create 8,000 jobs. Britain’s departure from the European Union had not changed the company’s plans, Neale said.

This year 70 new stores will be opened and by 2020 some 850 stores will have Aldi’s updated format, from 138 currently, Neale said.

Lidl is investing 1.45 billion pounds in Britain across 2017-18. It plans to open 50 stores and re-vamp 30 this year.

„To further strengthen our position as a British retailer, we will continue to invest in our UK expansion,” said Christian Härtnagel, Lidl UK’s CEO.

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