Aldi unveils £300m store upgrades as profits dip
Earnings squeeze suggests 'price is a battle the big four grocers simply won't be able to win', say commentators
German discounter Aldi is to invest £300m in revamping some of its existing stores in the UK, as the long-running supermarket price war that it has fuelled eats into profits.
Sales rose 12 per cent to a record 7.7bn last year, say accounts, but operating profits dipped 1.8 per cent to £255.6m.
Bosses said that reflected its "continued investment in prices", as the chain seeks to maintain its advantage on the "big four" of Tesco, Sainsbury's, Morrisons and Asda.
Those established grocers have been sacrificing profits over the past year to slash their own prices – but these latest figures show Aldi is not immune from the effects of the ongoing battle.
There were even suggestions in the summer that its slowing sales growth, coming at a time when it is opening new locations at a rapid rate, show same-store takings could actually be falling, says The Times.
But Aldi, which, along with Lidl, has shaken up UK grocery shopping and forced the big four to abandon expansionist strategies, is still taking market share and is committed to its growth plans.
It will open another 70 stores next year and aims to reach 1,000 by 2022.
"Matthew Barnes repeatedly said this morning that Aldi would invest 'whatever' it takes to retain its position on price]. He even hinted that Aldi would tolerate losses in order to win long term," says the BBC's Emma Simpson.
"In other words, price is a battle that that the big four grocers simply won't be able to win."
The £300m invested in existing stores will see "newly designed fixtures for alcohol, fresh produce and food-to-go" introduced, says Sky News.
The company said the changes follow its "largest-ever listening exercise" with 50,000 shoppers.