July 6, 2014 8:45 pm

Combined sales of Aldi and Lidl poised to overtake Wm Morrison

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The UK arms of Aldi and Lidl are on track for combined sales of more than £10bn this year, and could generate almost as much turnover as Britain’s fourth-biggest supermarket Wm Morrison in 2015.

The march of the privately owned German discounters in the UK underlines their challenge to the might of the big global grocers across developed markets.

Matthew Barnes and Roman Heini, joint managing directors of Aldi UK, told the FT that they expected the retailer to generate record sales £5bn in the year to December 31 2013, compared with £3.9bn in 2012.

Jaime Vazquez, analyst at JPMorgan Cazenove, said this figure – which also includes the Republic of Ireland – could increase to almost £7bn in 2014.

Ronny Gottschlich, managing director of Lidl UK, said he expected the chain to generate sales of about £4bn in the year to February 2015, compared with £3.3bn in the year earlier period.

This would see combined sales from Aldi and Lidl UK of more than £10bn this year. Mr Vazquez forecast that even if the rate of growth slowed, the two chains’ combined sales could match that of Wm Morrison in 2015. He expects Wm Morrison to generate sales of £13.5bn excluding fuel next year.

Aldi and Lidl consistently rank among Britain’s fastest-growing supermarkets as the cash-strapped middle classes discover the delights of Wagyu beef at Aldi and Lidl lobster. The big supermarkets have retaliated by pledging billions of pounds in price cuts.

Their advance is not confined to the UK. Aldi has expanded into America and Australia, while Lidl is preparing to enter the US – a market that has defeated retailers including Tesco.

Schwarz Group, which owns Lidl, could overtake Carrefour to become western Europe’s biggest grocery retailer as early as this year, according to Planet Retail, the consultancy.

Both Aldi and Lidl insisted they would not be beaten on price in the escalating UK price war.

Mr Barnes said Aldi has been investing some of its profit into cutting prices over the past few years, and had stepped this up during the past few months to keep its prices “absolutely razor sharp”.

He said: “Whatever does happen out there . . . one thing can be for sure, we will ensure that nobody undercuts us.”

Mr Heini said Aldi was comfortable for the focus to be on price. “Its our home turf, so to speak,” he said.

Lidl’s Mr Gottschlich said: “We won’t be beaten on price. That’s more or less everything I can say about it.”

Aldi is set to spend £400m in the UK over the next 18 months. This will include opening up to 55 new stores this year, and extending about 30 others. Aldi is also refurbishing stores to expand its range of fresh foods, including more ready meals, prepared salads and delicatessen products. It will hire up to 10,000 staff this year and increase the number of tills, trolleys and carparking spaces at its stores.

Overall, Aldi could double its UK store base from more than 550 to 1,000 in the next seven years, while Lidl could eventually increase from 607 UK stores to 1,500.

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