Aldi believes it could almost quadruple its UK store estate to 2,600 stores - and claims it could open as many as eight stores in some towns and cities.
The rapidly expanding discounter opened its 700th store in February as it continued towards its long-term target of 1,000 stores by 2022. But Matthew Barnes, CEO for the UK & Ireland, has scrapped that plan and believes Aldi has a “massive opportunity” to open many more.
“We will be at 1,000 stores well in time for 2022,” he told The Grocer in a wide-ranging interview where he also discussed Aldi’s contentious like for likes, its profitability, and its in-store experience.
“I can say that with absolute assurance. We have 700 stores now and 300 sites already approved on our books. And there are 600 town locations where we don’t have a store, in many of which we could easily have two, three or four stores. In the likes of Bath or Torquay we could easily have three and we don’t have one. We don’t have a store in Watford, [but] that would be a six to eight Aldi town.”
Barnes added: “If you look at the population, we think not only could we have a store in every town and city, but for every 25,000-30,000 people. There is nothing to suggest we can’t do that.”
According to the ONS, the UK population is 65 million. One Aldi store for every 25,000 people would equate to 2,600 stores. “The appetite for the Aldi business is stronger than it’s ever been, so will we run out of opportunities? Definitely not. The only other part of that equation is - will customers fall out of love with us. We just won’t allow that to happen. In all walks of life consumers want the best quality they can afford, at the best price available. What drives those two outcomes is the intent and expertise to get there, and a business model that enables us to survive off a much lower margin than anyone else. So looking to the future we will reach 1,000 stores by 2022. And I think there is massively more potential than that.”
The ambitious expansion plans come off the back of a record Easter for Aldi. Kantar Worldpanel reported an 18.3% uplift in sales for the 12 weeks ending 23 April 2017, and the four-week figure to 23 April was 21.1%.
“At key events like Christmas and Easter people are looking to trade up and traditionally, historically, Aldi has dropped share,” said Barnes.
“People like to spoil themselves and spend more. Certainly going back a few years our range didn’t cater for that as much as it could have done. But it’s been a huge focus of ours over the last few years. “There is a real opportunity to grab the attention of customers that aren’t main shoppers, who are looking intently to see who has the best offer at Christmas or Easter. So over the last four years we have added more and more products, particularly in premium and fresh, and the more we add, the more we sell. We saw barely any drop in market share at Easter and a surge leading up to it. That’s put wind in our sails and our growth is going as fast as it’s gone since 2014.”
Barnes said Aldi HQ was “delighted” with the performance of its UK arm. “I am hugely fortunate to be the CEO of a privately owned company with owners that have a real appetite to invest more and more in the coming years,” he said. “And that investment is a sizeable one, £450m this year alone. Of that, £150m is just for additional space, our head office, our regional DCs, we are extending as many stores as we can this year and finding new land. It’s a great opportunity for the Aldi business. There are plenty of markets in continental Europe where we have been for many years and there is growth potential. But it’s not as great and as big as the potential we have here.”
In total, Aldi has invested £1.7bn in UK stores and supply chain over the last five years. Its market share now stands at a record 6.9%, up from 3.2% in 2012.
No comments yet