Aldi boss admits store opening program is tougher than expected as it misses target | New

Aldi missed its property growth target due to unforeseen challenges, acknowledged the retailer’s UK and Ireland CEO Giles Hurley.

The discounter aimed to have 1,000 stores in the UK by 2022, but currently only has around 970, with another 16 expected to open this year.

Hurley said the 1,000 store milestone would not be reached until 2023, thanks to challenges such as site availability.

“There are of course a lot of things beyond our control in terms of the store opening schedule,” Hurley told The Grocer.

“Obviously there’s the planning, which I have to say has been more difficult than ever in the last two or three years, which I guess is perhaps to be expected because of all the challenges related to the pandemic.

“There is of course a little availability of sites.

“There are definitely more challenges around construction and materials.

“I think you would hear the same things from most businesses right now, that the economic landscape is making things a little tougher than we would have expected.

“Having said that, it slowed us down, it’s not going to stop us. We are going to open 1,000 stores. It will happen at some point next year. We are currently trying to identify exactly which store this will be.

Aldi is not the only supermarket to have store openings disrupted by complications with planning permissions. In February, Icelandic doctor Richard Walker said nearly all stores opened by the company were subject to long planning delays due to underfunded local councils and overly complicated rules.

Aldi has the added challenge of its ambitious property growth targets, which have required the opening of around 50 new stores a year. Property experts predict it will be 12 to 24 months behind in reaching a longer-term target of 1,200 stores by 2025 as it competes with Lidl for a dwindling number of suitable locations.

Speaking this morning as Aldi announced its financial results for 2021, Hurley said it was continuing to work towards the 2025 target and aiming for around 50 new openings and relocations next year.

However, to reach 1,200 by the start of 2025, Aldi now needs to open more than 100 stores a year, double its pre-pandemic growth rate.

Another challenge is recruiting enough staff for stores in an increasingly competitive job market. Lidl – which has its own ambitious property growth target – and Aldi have twice raised hourly pay rates for newbies this year. Lidl’s latest hike, announced last week, puts its national rate for traders above Aldi’s at £10.90 an hour from £10.50.

Hurley said Aldi would review wages before the end of the year.

The trade update revealed that Aldi suffered an almost 80% drop in operating profits in 2021 in the UK as sales stagnated before a strong rebound in growth in 2022.

Sales edged up 0.9% to £13.65bn, accompanied by a 79% fall in operating profit to £60.2m from £287.7m, charged to investments in prices, people and expenses related to the pandemic.

However, Aldi has attracted 1.5 million more customers to its stores over the past 12 weeks, according to the update.

The discounter overtook Morrisons to become the UK’s fourth-largest supermarket according to Kantar’s latest 12-week data to September 4, with a market share of 9.3%, up from 8.1% a year earlier.

Hurley said despite the changing market, Aldi would never see itself as one of the new big four. “I think there are still a lot of big fours out there,” he said. “Department stores, big brands and big prices, frankly. It’s a club we’ll never be a part of and that’s why shoppers are changing their buying habits in droves and coming to Aldi.

He said that in addition to opening and moving stores, Aldi was expanding existing ones.

“Our relocation program is extensive. The results have been particularly positive and we have seen this recently, whether it is our relocated store in Bangor or our relocated store in Haddington in Scotland.

He said the latest ‘project fresh’ format benefits from ‘a larger store, wider aisles, better lighting and self-checkouts – all developments that allow these stores to operate at a higher level. significantly higher than that of the stores they replaced”.