Aldi to ramp up pressure on big supermarkets with £600m expansion plans

Sinead Moore
Aldi to ramp up pressure on big supermarket with £600m expansion plans
Aldi to ramp up pressure on big supermarket with £600m expansion plans

%VIRTUAL-SkimlinksPromo%Aldi is to invest £600m in major expansion plans in the UK in the store's biggest ever investment in Britian.

As part of the expansion, the discount retailer will open 60 new stores next year. It also plans to open a second convenience store in the capital, in Tooting Bec, south London, according to the Daily Mail.

The German-owned supermarket will also carry out 'major refurbishment' of existing shops and a regional distribution centre in Barnsley.

The investment plan will see staff number double to 24,000 by the end of this year.

The retailer also plans to build a new regional distribution centre in Cardiff in 2016, on top of the £600m investment drive.

News of the massive investment will put further pressure on Tesco and other major supermarkets.

This comes just a day after Tesco's chief executive Philip Clarke announced he will be stepping down as the boss of Britain's biggest supermarket.

The supermarket is currently seeing its worst sales performance in four decades.

Mr Clarke, who had worked his way up from the shop floor to lead Tesco, admitted last month that the store's quarterly like-for-like sales, which posted a 3.7% drop, were the worst he had known in 40 years.

Tesco and other mainstream supermarkets have been battling with intense competition from discount rivals such as Aldi amid a continuing upheaval in customers' shopping habits and a squeeze on household budgets.

Morrisons has also issued profit warnings.

In contrast to Tesco and Morrissons' profit dip, Aldi will reveal annual sales have jumped 5 per cent from £3.9bn to £5bn when it issues full year figures in September, according to joint managing director Matthew Barnes.

Sainsbury's has set up its own rival discount chain in partnership with the Danish owner of Netto in an attempt to compete with Aldi's prices.

Discounters such as Aldi and Lidl are currently leading the market.

According to the Daily Mail, Aldi achieved a record 4.7 per cent market share in the most recent quarter, and saw sales jump 40.6 per cent and profits double to £157.9m for the year to December 31, 2012.

Joint managing director Roman Heini said he was glad he didn't run Tesco: 'I'm glad we don't have huge complex beasts with online, banking, huge ranges and am thankful what we have is simple.

'This has enabled us to be close to the market. There is no clear evidence that online is a profitable model.'

Tesco and Morrisons have both been forced to respond to Aldi's continued growth by investing hundreds of millions in a price war.

Mainstream supermarkets have recently been focusing on setting up smaller convenience stores and selling food online.

Aldi, on the other hand, has focused on gaining scale at a time customers want quality items at a low cost.

Tesco Adds to Supermarket Gloom
Tesco Adds to Supermarket Gloom