Aldi expands stores to compete with rivals

Aldi is due to open double the store space during 2015 than its rivals and more than Tesco, Morrisons and Sainsbury’s together.

Aldi first arrived in the UK about 25 years ago and is preparing to add slightly more than one million square feet of overall floor space – about 60 stores – during 2015.

Lidl, the German budget supermarket, is also planning to add around 340000ft² of new space.  This is double the planned growth for Tesco during 2015.

The expansion plans undertaken by Aldi places emphasis on the changes in the retail sector.  The overall growth of the market is due to take place in smaller stores as shoppers in the UK have changed their shopping habits fr om a weekly trip to large out-of-town supermarkets, to more regular visits to local or mid-sized stores.

Research has shown that the 1.02m sq ft of space planned by Aldi, dwarfs the Asda-planned 600000 sq ft.  Sainsbury’s is due to add 450000ft², Morrisons 220000ft² and Tesco 170000ft².  Marks & Spencer have seen success in their smaller Simply Food outlets and is planning to expand by 600000ft².

The big four supermarkets have lost market share as they have had to lim it or discard planned openings.  Tesco, in particular, has been plagued with profit declines, resulting in the closure of 43 stores and scrapping of 49 new stores.

The head of UK investment at Colliers, James Watson, said that traditional markets have been hampered by the desire of shoppers to make smaller purchases and shop online.  This new shopping routine has wiped out the profits made by retailers on big weekly shopping trips and delivery charges on online shopping very rarely cover the actual costs involved.

Aldi is however considering a move into offering online delivery.  This comes in spite of its focus being on a low-cost, simple business model.  The UK experiences a relatively high 5% online shopping market and appears to be the best market for Aldi to introduce its online model.

The chain may also consider going online in other countries, including Spain, Portugal and Germany.

Aldi is growing within the territory of the big four and has reached a 5% market share.  Lidl has grown its market share to 3.5%.  Aldi has announced that it would create around 35000 jobs in the UK as it plans to have 1000 stores in the UK by 2022, doubling its current number.

Aldi has been named as the official supermarket sponsor for the British Olympic team when it participates in the 2016 Games in Rio.  This commercial deal has confirmed Aldi’s position in the UK market.

Related shopping malls and stores:

Tesco

Sainsbury's

Asda

Morrisons

Aldi

Lidl

More about shopping malls in the United Kingdom