German discount grocery chain Aldi has reported record sales in the U.K. and Ireland and its boss insists that shoppers have changed their habits forever.
As Aldi reported that annual sales had topped $18.9 billion in the year to December 2022, over $2.4 billion up on a year prior and a record in its 33-year history in the U.K., CEO Giles Hurley predicted more to come.
Aldi’s operating profit nearly tripled in 2022 to top $218 million, up from around $73.5 million in 2021, helped as spending on pandemic measures in 2021 fell away, while an extra million British customers shopped at Aldi over the past 12 months according to data from supermarket tracker Kantar.
That means two thirds of U.K. households are now shopping with the discount chain, the company claimed.
“Britain is shopping very differently to how it did 18 months ago – fewer trips, more own label products, and switching supermarkets in search of better value,” Hurley said. “What we’re seeing is a new generation of savvy shoppers who’ve turned their back on traditional, full-price supermarkets in favor of transparent, low prices.”
He believes that the cost-of-living crisis has changed shopping habits permanently, and said that shoppers are buying more own label products than ever. He expects this trend to contine, with produce sold by supermarkets under their own name now representing more than half of sales by value.
That’s great news for Aldi and its German arch rival Lidl, where the vast majority of their product offer is private label.
Aldi Continues Growth
Aldi overtook grocery chain Morrisons last year to become the U.K.’s fourth-biggest supermarket and Hurley insisted: “If you look in volume terms that figure is much bigger and at the moment own label products are growing at twice the rate of branded goods. Why would shoppers go back?”
By contrast, a number of the other supermarket groups have reported falling profits and Lidl’s British business made a surprise annual loss as a result of its expansion plans and rising costs.
The discount supermarket reported a full-year pre-tax loss of $92.6 million on September 14, after posting profits of $50.2 million the year prior. Lidl said it had opened more than 50 shops in a year and had increased its market share among its rivals.
Undeterred, Lidl chief executive Ryan McDonnell insisted that the retailer would continue to grow its store portfolio and said there was “no limit” to its U.K. ambitions.
Aldi Opens 1,000th Store
For its part, Aldi said that the soaring results were due to an exceptional prior year when its profit margin fell to an 11-year low of 0.4% after significant Covid-related costs and Hurley admitted that margins remained very tight in the grocery sector at just 1.2% last year.
Aldi has now set a long-term target of operating 1,500 U.K. stores, up from a target of 1,200 previously and it opened its 1,000th store in Woking in the South-East England earlier this month.
It has pledged to invest a further $1.7 billion in the U.K. over the next two years.
Food price inflation has started to tail off slowly but is up 13.6% in the year to August, according to the Office for National Statistics, with supermarkets cutting prices on a range of products over the last few months to try and ease the cost of living squeeze.
Meantime, in France Carrefour recently called out major brands over ‘skrinkflation’ in a bid to pressurize some its major suppliers to drop prices.
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