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Undeterred by pandemic, Aldi sticks to UK store expansion plan

LONDON (Reuters) - Aldi will open around 100 supermarkets and invest 1.3 billion pounds in Britain over the next two years, the German firm said on Monday, as it sticks to its growth plans despite the impact of the coronavirus on shopping habits.

FILE PHOTO: Signage is seen at a branch of Aldi Local, as discount supermarket chains Aldi and Lidl look poised to accelerate their push into home delivery to satisfy burgeoning demand for online grocery shopping in a shift expected to endure beyond the coronavirus crisis, in London, Britain, June 17, 2020. REUTERS/Toby Melville

Britain’s fifth-biggest supermarket, privately owned by Germany’s Aldi Sud, has grown its UK market share to 8% over the last decade thanks to its aggressive store opening programme.

However, industry data has shown its market share edge lower during the pandemic, hindered in particular by a lack of online capability.

Aldi retained its long-term target of 1,200 stores by 2025. It currently trades from nearly 900 in the UK.

“It’s important to remember that over 85% of the market remains in bricks and mortar shopping and our investment in online doesn’t come at the expense of our focus on stores,” CEO Giles Hurley told reporters.

The group expects to create 4,000 jobs next year, adding to 3,000 new roles already created in 2020.

Aldi also plans over 100 store upgrades, along with investment in distribution centres and in e-commerce such as a click and collect service.

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Aldi reported a 49% increase in operating profit to 291.2 million pounds for 2019, on total sales up 8% to 12.3 billion pounds, but that was before the pandemic. Margins improved, with efficiencies of scale offsetting price cuts.

The pandemic has prompted Aldi to accelerate its push into home delivery so it can benefit from a jump in demand that is expected to endure.

In April it started selling online food parcels to help self-isolating and vulnerable customers. It is also ramping up a rapid delivery service in partnership with Deliveroo and is trialing click and collect.

Hurley said Aldi was committed to remaining “Britain’s lowest-priced supermarket” - a claim Aldi says is backed by industry data.

“Our rivals may drop their prices, but we will always respond by dropping further,” he said.

The CEO said Aldi has seen increased demand for basic items, such as toilet paper, pasta, rice and tinned food, since last week when the government imposed more curbs to stem the pandemic’s spread but does not currently see the need to reimpose limits on shopper purchases.

“As long as customers continue to shop as they normally do...then availability will continue to be excellent,” he said.

($1 = 0.7831 pounds)

Reporting by James Davey; editing by Susan Fenton and Keith Weir

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