Neither Aldi nor Lidl are making projections on the number of stores they will open in 2024, despite both recently setting out their ambition for hundreds more.
After publicly targeting about 50 annually since 2017, both have already slowed estate expansion in 2023. Aldi is on course to have opened 30, while Lidl cut its pipeline for the year to 25.
The decision not to project any number for 2024 marks a change of tone from the two discounters since the start of the cost of living crisis. In autumn 2021, Aldi said it would “open 100 new UK stores over the next two years”, and Lidl said it open “roughly a store a week for the next four years”.
Aldi maintains it can grow to 1,500 UK stores, but has not set any timeframe. Commenting in September as it opened its 1,000th – a milestone it had originally aimed to reach by 2022 – Aldi CEO Giles Hurley said “the next phase” of expansion would be “another 500 new stores over the coming years”.
“It is a long-term target and is not a ceiling to our ambition to have an Aldi store close to everyone in the UK,” he said.
Aldi’s total store numbers expected to reach 1,500
As Lidl GB announced its annual results in September, its CEO Ryan McDonnell also said it saw “the potential for hundreds of new stores across Great Britain”. The supermarket currently has about 960.
The pressure the cost of living crisis will be putting on the discounter’s expansion plans was highlighted in a recent report on the food store market from property consultancy Knight Frank.
The cost of living crisis should “in theory play heavily into the discounters’ hands as consumers increasingly trade down”, the report said.
“However, at the same time, neither Aldi nor Lidl is immune to the wider economic background of rising costs,” it added. “This will be exerting considerable pressure on both Aldi and Lidl, neither having significant margin to play with in formulating a response to prevailing market conditions.”
On the potential for hundreds mores stores, the report said: “Sales cannibalisation is another major risk – although so far, discounters have downplayed this concern.”
Lidl CEO saw potential for hundreds of new UK stores
It also noted: “Despite its bravado, there are some signs to indicate Lidl’s expansion via acquisitions has slowed in Q1 2023, as a notable number of property disposals came to market.”
Lidl fell to a £76m loss in the 12 months to 28 February 2023, from a £41.1m profit the year before, as it opened nearly 50 new stores. The fall in profits came despite revenue climbing 18.8% to £9.3bn.
Lidl scaled back its new store pipeline this year to focus investment on growing warehouse capacity, and in September opened its biggest distribution centre in the world, at 1.2 million sq ft, in Luton.
Increasing warehouse capacity and efficiency is seen by experts as a way for Lidl to ease margin pressure while keeping prices low, amid pressure at group level from high interest rates.
Aldi’s operating profit rose to £179m in 2022, from £60m the year before, as revenues in the UK and Ireland rose by 14% to £15.5bn.
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