NJL analysis of Aldi's results
News and results coming out of the first half of the 2017/18 financial year demonstrate the continued push of German convenience stores on the UK convenience goods market. As Aldi and Lidl advance on displacing the UK ‘Top Four’ (Tesco, Sainsbury’s, Asda, and Morrisons), it is the former who has surpassed already confident revenue targets.
This morning Aldi reported revenues up 13.5% in FY16. This surpasses optimistic targets envisaged by industry leaders.
However, as ever, evidence suggests the UK convenience market remains volatile and highly competitive, with limited margin for profit or error. Aldi’s operating profit fell 17.1% to £211.3million. Global Data puts this decrease down to:
- Cost of goods increasing
- Supply chain cost increases
- Investment in improving older stores
- Investment to enhance customer experience
Matthew Barnes, Aldi Chief Executive Officer, notes:
"The fact that more and more customers walk through our doors every day of the week gives us the confidence to carry on investing - in people, jobs, stores and our distribution network – and continues to fuel our growth right across the UK "
Hollie Barton, Planner at NJL Consulting, said:
“It is clear there is an air of fickleness about UK convenience goods spend. No longer are people loyal to a brand, but happy to go with what is convenient, cost-effective and meets their shopping requirements. With Co-op closing in on a £130m takeover of Nisa, and this news of Aldi, it is clear there’s still a fight to be had for market share as competitors continue to push the ‘Big Four'.”
In 2016/17 alone, NJL’s retail team has experience of delivering new Aldi stores across the UK for major landowners and developers, and currently has a number of applications in the pipeline.