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Aldi operating profit soars 450%

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Discount grocer Aldi has reported a 450 per cent rise in operating profit for the year ending December 31st 2012, it has been announced today.

Group turnover rose 29.4 per cent to £2.7 billion over the period while post-tax profit grew £113.8 million, which the group believes is the result of improving its fresh food range and strengthening its everyday low price offer.

Over the course of last year, the German supermarket chain opened 29 new stores and plans to open a further 40 by the end of 2013.

A £181 million investment will take the total number of UK stores to over 500 and will create 4,500 new jobs this year alone as increasing its reach and meeting the needs of its customers remains key to the group’s strategy.

Aldi’s Group Managing Director Matthew Barnes said: “Sales of our fresh meat range have doubled, while fruit & veg sales are up 48 per cent and bakery sales are up 40 per cent.

“In addition, we are seeing a trend of increasing footfall and sales growth at all of our stores nationwide. Fresh food is an important part of the weekly shop and consumers are flocking to Aldi as they realise we offer some of the freshest food in the UK.

“People are seeing the stand-out awards that we’re winning, such as Which? Magazine Best Supermarket of the Year, and are more encouraged to visit our stores and fill their trolleys. People like our quality as much as our low prices.”

According to the latest data from consumer analyst firm Nielsen for the four weeks to June 23rd 2012, Aldi holds 4.1 per cent of the UK grocery market as its market share growth increased 54.1 per cent on the same period last year.

Aldi’s average consumer spend for the same period also saw a rise, up by approximately 19 per cent as shoppers bought around 13 per cent more Aldi products than the same period last year and Nielsen found that the grocer’s customer base has jumped by a third since 2010, attracting one million new shoppers.

Marketing has played a big part in boosting the chain’s visibility and reputation, with its Like Brands TV campaign awarded Nielsen’s Most-Liked Advert of the Year 2011 while Aldi also boosted its online presence, amassing over 100,000 Facebook Likes since its brand page launch in October last year.

Joint Group Managing Director Roman Heini explained that Aldi’s fresh approach to innovation is creating high levels of loyalty among consumers despite the strong competition across the market.

He added: “We’re tracking similar growth in 2012 in terms of sales volumes and turnover, and store footfall.

“Aldi has become more relevant to British consumers. They can buy what they need and want at Aldi, at a price they like.

“Our customer-focused approach and expansion plans will help sustain our market share and growth in the long-term. People no longer feel they need to shop at Aldi, they want to shop in our stores.”

It seems the discounter’s strategy to broaden its scope as consumers continue to struggle is paying off and John Pal, Retail Analyst at Manchester Business School said that the brand has found favour with UK consumers for a number of reasons.

He said: “The success of Aldi comes as no surprise. This is, after all, the German retailer that saw off the world’s largest retailer, Walmart, in its home country a number of years ago.

“Whilst some commentators may suggest that the grocery sector is polarising with value or discounters such as Aldi at one end and Waitrose at the other, it is becoming clear that Aldi is positioned to take advantage as hard-pressed consumers seek better value.

“Backed by simple TV adverts, special weekly deals and limited choice is the antithesis of some grocers who have been offering far too many alternatives to customers and are involved in costly loyalty and voucher schemes. Allied with this is the general adherence to a standard store footprint, that can fit into smaller centres.

“There are still plenty of consumers without immediate access to an Aldi store, but their plans will put an end to that in time.

“One thing is for sure; Aldi is here to stay and will continue to grow. No longer do consumers think of Aldi as ‘cheap’, rather they see the retailer offering value.

“Moreover, Aldi have even ditched some long-held principles as it has, for instance, increased the number of products offered and is further testimony that it responds to consumers’ needs. With no end in sight to fragile consumer confidence, and the general economic malaise, consumers will flock to new Aldi stores.

“The worry for the Big Four, with the pressures of the Stock Market bearing on them, is that they may not be able to entice these consumers back when the good times return.”

Published on Monday 01 October by Editorial Assistant

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