Written by Lauren Howells
Budget supermarket chain Aldi has announced sales of £8.744 billion in 2016, a £1 billion increase from 2015.
This 13.5% increase in sales in the UK and Ireland, comes despite an overall grocery market growth of just 0.5% during the same period, according to Kantar Worldpanel data.
Chief Executive Officer of Aldi UK and Ireland, Matthew Barnes, said that the supermarket was doing everything it could to “insulate customers” from costs increases, whilst improving the quality of their range and introducing the new products that customers have asked for.
Aldi’s profits fall
However, despite this growth in sales, Aldi also announced a 7% drop in gross profit and a 17% decline in operating profit.
The company attributed this drop in profits to its “continued investment in prices and infrastructure”.
This BBC article speculated that one of the things that could have “weighed” on Aldi’s profits, may be its £300 million investment programme to create additional space for fresh food and longer, wider aisles, known as “Project Fresh”. Aldi reported than a total of 250 stores will have launched in the new format by the end of 2018.
Aldi said that last year, it invested over £450m of capital expenditure in opening new stores and improving its distribution centres in the UK and Ireland, bringing total investment over the past five years to £2 billion.
1 million new customers switching to Aldi
Aldi said that its growth had been driven by the 1 million new customers (according to data from Kantar Worldpanel) who had switched to Aldi during the past year.
Data from the same source points to Aldi as the UK’s fifth biggest supermarket, with a 6.9% share of the market, after Tesco, Asda, Sainsbury’s and Morrisons.
Aldi planning to open 70 new UK stores in 2018
Aldi, which operates 726 UK stores, confirmed that it planned to open 70 new UK stores in 2018, in order to work towards its goal of reaching 1,000 by 2022.
The privately-owned company said that its future capital expenditure plans remained “entirely unaffected” by the UK’s decision to leave the EU and confirmed that it still expected to invest £459 million during 2017.
Data confirms Aldi is lowest priced supermarket in the UK
Aldi said that data published by The Grocer at the end of August this year confirmed that it was the lowest priced supermarket in the UK and 15.2% cheaper than its nearest competitor.
“Our growth is accelerating, thanks to the hundreds of thousands of new customers switching their shop to Aldi. This is happening right across the UK and is all down to a simple, straightforward commitment – products comparable to the leading brands and supermarket premium ranges at the lowest prices in Britain.
These results and our strong performance during 2017 mean we are confident and excited about our future plans. We continue to do what we have always promised – invest in our prices to ensure Aldi customers enjoy outstanding value, always.”