German grocery chain sees 13.5 per cent rise in sales
The UK arm of Aldi announced a third consecutive year of falling profits as the German grocery chain struggles to maintain cheaper prices against its rivals.
Aldi UK and Ireland reported a fall of 17 per cent in operating profit in 2016, despite a 13.5 per cent leap in sales to £8.74bn. The German chain attributed this fall in operating margin to its strategy of maintaining a price gap over market rivals and investments in new stores and distribution centers for future growth.
According to Reuters, this price slashing trend led by Aldi and fellow German discounter Lidl has transformed the landscape of UK food retailing over the last decade and also affected the returns of Britain’s big four market players, Tesco, Sainsbury’s, Asda and Morrisons.
According to Matthew Barnes, chief executive Aldi UK and Ireland, the grocery chain will do “everything and anything” to keep its prices lower, indicating that profits might fall again next year: “The fact that more and more customers walk through our doors every day of the week gives us the confidence to carry on investing.”
Despite the UK’s decision to leave the EU, Aldi’s future expenditure plans remain “entirely unaffected” as it expects to invest £459m in 2017.
With a market share of 6.9 per cent in grocery and as UK’s fifth biggest supermarket, Aldi currently operates 726 stores and plans to have over 1,000 by 2022.