Discounters Lidl and Aldi are likely to have a 15% share of the grocery market in the Irish Republic - three times their current figure - within five years, according to a report on the sector by Dublin-based Merrion Stockbrokers.
By then, Lidl (with 36 stores) and Aldi (with 12) plan to have a total of 150 outlets across the Republic and their combined sales could be over E1bn, says the report.
It claims that over 90 potential retail sites are being assessed by Aldi, which is also planning a 350,000 sq ft distribution centre in Naas, County Kildare.
The report, prepared by Mark McCleane, an associate director with Merrion, acknowledges that aggressive price-cutting by Tesco and Dunnes has blunted the advance of the discounters, pushing their combined market share from a peak of 5.6% to 4.9% by the end of last year. However, McCleane sees this as a temporary setback.
Lidl and Aldi, he points out, have fewer problems with planning permission than the major chains because their outlets are smaller. By sourcing most of their stock outside Ireland, they can also use their international purchasing power to keep prices down in a way that indigenous chains cannot.
Given Tesco’s international muscle, the main threat from this increased competition is to Dunnes, according to the report. It claims that the family-owned chain faces “significant and immediate operational and strategic challenges”.
Anthony Garvey