Aldi raises stakes and goes online

DISCOUNT retailer Aldi​ is to ​take on its rivals with the launch of an online service in Britain early next year.
Aldo has reported a fall in profits as the supermarket price war took its toll on earnings despite sales surging to a new record level.Aldo has reported a fall in profits as the supermarket price war took its toll on earnings despite sales surging to a new record level.
Aldo has reported a fall in profits as the supermarket price war took its toll on earnings despite sales surging to a new record level.

The news came as Aldi announced record ​annual ​sales ​of £7bn, ​but said profits were hit by the supermarket price wars as the big grocers slash prices to lure in customers.

Aldi will launch an e-commerce website to sell wines by the case from early next year, followed by non-food ‘Specialbuys’ in the spring.

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Specialbuys have proved very popular in Aldi stores and focus on bulkier, seasonal items, such as ‘Back to school’ uniforms, camping gear, cycling clothes and Halloween outfits.

There are no plans to launch grocery home delivery as Aldi said British supermarkets have struggled to make money from online food sales.

The online service will be available in England, Scotland and Wales, but there are no details yet on the delivery fee or the minimum spend.

Customers will be offered a home delivery option as well as collection from 5,000 other locations such as small local shops and post offices.

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Aldi, which is stealing market share from the big four UK grocers – Tesco, Asda, Sainsbury’s and Morrisons – said revenues in 2014 jumped 31 per cent to £6.89bn, but operating profits fell four per cent to £260.3m following increased investment in prices and people as it ​slashed prices and ​created more jobs.

It ​has ambitious growth plans, with 65 sites due to open in the current year, up from 54 in 2014.​ The group has 54 stores in Yorkshire and employs 2,700 people in the county.​

Chief executive Matthew Barnes said Aldi is maintaining a price gap of at least 15 per cent with rivals on an average basket of goods.

“Our launch online is another exciting chapter in our story. This will enable us to introduce the Aldi brand and some of our best-selling, best-quality and best-value products to thousands more customers across the UK.”

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The latest surge in Aldi’s sales represented an extra £31​m in sales revenue every week in 2014.

It now operates 598 stores in the UK and said it remains on course to achieve its target of 1,000 by 2022, recruiting 35,000 more peop​le.​

“At present, there are still 47​ per cent​ of households that don’t shop with us​,” said Mr Barnes.

Julie Palmer, partner at consultancy Begbies Traynor, said: “Today’s disappointing results show that even Aldi can’t escape the clutches of the ongoing supermarket price war.

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“As its bigger rivals have committed to investing billions of pounds worth of price cuts over the next few years, Aldi has been forced to react in kind, causing its operating profit to fall by ​four per cent​ last year, compared to stellar profits growth of 65​ per cent​​ during 2013 and 124​ per cent​ in 2012.

“Still, the ​b​ig ​f​our UK supermarkets could learn a lot from Aldi’s business model, which saw the group boost sales by 30​ per cent​ last year, as it continues to appeal to higher value, middle-class shoppers.​“​

​An insider at one of the big four supermarkets said: “​Aldi is seeing enviable sales growth, but they are starting to see profits fall. Once the new store growth is gone, it will get harder.

“The launch online is interesting. The more complexity they add to the business, the harder it is to maintain profitability and service. For us, that’s good.”

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A source at another leading chain said: “Their way of doing business is to do it as cheaply as possible. Wine is quite a simple thing to do. It sounds very sensible not to go further. It’s much more challenging to deliver fresh food.”

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