The discount supermarkets Aldi and Lidl are pressing ahead with rapid expansion despite fears over shifting shopping habits that are forcing Britain’s “Big Four” grocers to shake up their store estates.
The pair have filed 90 planning applications for new supermarkets so far this year, according to fresh figures compiled by Barbour ABI for The Sunday Telegraph. Lidl has submitted 44 applications for new stores already this year, while Aldi has filed 46.
By stark comparison, Tesco, Sainsbury’s, Asda and Morrisons have together filed a total of just 11. The Big Four are already grappling with too much store space and property costs at a time when customers are increasingly preferring to shop online or make more frequent trips to local convenience stores.
Tesco and Sainsbury’s are continuing to open smaller convenience stores to match demand. Meanwhile, they are filling their larger stores with concessions, cafes and other services in an attempt to entice more shoppers. Yet Aldi and Lidl have both set ambitious targets for large store growth as they look to seize more market share.
“The rise of Aldi and Lidl continues to be evidenced through our planning application statistics,” said Michael Dall, lead economist at Barbour ABI.
“Despite improving financial results for Tesco in particular, it is the discount retailers that are continuing to dominate the retail construction market.”
Aldi now has 726 stores across the UK and plans to open a further 70 shops next year as part of its target to have more than 1,000 shops by 2022. Christian Hartnagel, Lidl’s new boss, has said that he wants the discounter, which has 670 stores, to grow at the fastest pace ever with 60 new shops a year in a £1.45bn ambitious expansion plan for the UK.
Despite both supermarkets’ ambitious targets, the number of planning applications filed so far this year is a steep fall from the 90 Lidl filed and 68 Aldi submitted in 2016. Last month, Aldi revealed that its profits had fallen for a third year in a row as the budget supermarket ploughed money into opening stores.
Lidl continues to be Britain’s fastest growing supermarket, growing sales last month by 16pc, while Aldi grew sales by 13.4pc, according to industry figures by Kantar. Together they now control 12pc of the UK grocery market and analysts at Moody’s expect the discounters’ market share to reach 15pc by 2020. Each 1pc market share gain equates to around £1.2bn in extra annual revenue.
“We believe most of the ongoing revenue gains by the discounters will come at the expense of the Big Four of Tesco, Sainsbury’s, Asda and Morrisons,” said David Bradley at Moody’s.
“The only uncertainties are the extent to which inflation and population growth soften this hit to revenues, and how the loss of market share will spread out.”
Sales have been boosted by inflation this year as supermarkets have raised prices to cover higher costs from a weaker pound. But food sales fell by 0.6pc last month, according to official figures.