Aldi, the German budget supermarket chain, strengthened its hold on Britain’s grocery shoppers in December as families tightened their purse strings in the face of the cost of living crunch.
The discounter, which overtook WM Morrison to become the UK’s fourth largest grocer by market share in September, reported a 26 per cent annual increase in sales in the month to reach £1.4 billion in the UK for the first time.
New store openings also helped to drive the rise in receipts as the company continued to expand its footprint, with 990 stores across the UK by the end of 2022.
A combination of the World Cup and festive shopping saw sales of snacks, such as crisps and nuts, rise by 40 per cent. There were also strong revenues from fresh meat, with a 28 per cent increase in fresh poultry and pork sales.
Turkey remains the most popular option for a Christmas roast but the company noted a rise in demand for “alternative roasting joints,” including gammon. Shoppers also bought more than 48 million mince pies, 38 million pigs-in-blankets and 1,700 metric tons of sprouts.
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Aldi UK, privately owned by Aldi Sud, also recorded an almost 30 per cent rise in sales of chilled desserts, while sales of cheese increased by around 50 per cent.
Research from Kantar showed that Aldi was the UK’s fastest-growing retailer during the three months to the end of November with a 24.4 per cent increase in sales. An additional 1.5 million households shopped at Aldi compared with last year, with the rise taking its market share to 9.3 per cent.
Aldi, and its German rival Lidl, have grown rapidly in recent years leading established traditional supermarkets such as Tesco and Sainsbury’s to reduce prices in a bid to compete. Both Tesco and Sainsbury’s have schemes in place that aim to match the prices of Aldi products, and also use loyalty schemes to prevent customers from defecting.
Soaring inflation combined with festive shopping meant that last month was predicted to be the biggest December yet for take-home grocery sales, which were forecast to surpass the £12 billion mark for the first time.
Aldi employs more than 40,000 staff. As part of a plan to invest £1.3 billion in the UK over the next two years, it will open, expand or relocate dozens of existing stores and develop its network of distribution centres. In the last three months the chain has opened 16 new branches in locations including Broadstairs, Luton, Lincoln and Barnet.
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Pre-tax profits for Aldi fell more than 86 per cent to £35.7 million in the last financial year compared with a year earlier due to higher Covid-related costs and investment in pricing.
Giles Hurley, chief executive officer of Aldi UK and Ireland, said: “I’m immensely proud of our amazing colleagues who once again went above and beyond to deliver an amazing Christmas for our customers.
“As the UK’s cheapest supermarket, we were able to help shoppers enjoy the Christmas they deserved.”
Behind the story
The post-Christmas deluge of retailer updates kicks off tomorrow with news from Next, the fashion and homewares chain (Isabella Fish writes). It will shine a light on the health of the sector in the aftermath of its “golden quarter”, which includes the key Christmas trading period.
Next is often the last big retailer to launch year-end sales, but it began its markdowns on Christmas Eve this year, suggesting that it has “not proved immune to the challenges” of a troubled economy, according to analysts at AJ Bell, the broker.
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Also tomorrow, Greggs will share its fourth-quarter and full-year trading performance. The focus will be on whether the bakery group can maintain its guidance of flat profit before tax in the full year. Pre-tax profits were £145.6 million in the year to January 1, 2021, compared with a £13.7 million loss the year before.
Analysts at Panmure Gordon said that, given the price increases and cost efficiencies implemented during the year, they continued to “assume” that Greggs would maintain its full-year guidance. In October, the company increased the price of its sausage rolls to £1.15. They rose from 50p to £1.10 in August.
B&M European Value Retail may have seen its low-cost proposition appealing to consumers. In November, it said trading had been good in the early stage of the golden quarter. Like-for-like sales in UK stores were 2 per cent higher over the first six weeks of the key period.
Next Tuesday, DFS and JD Sports Fashion will report on Christmas trading, followed by updates from J Sainsbury on Wednesday, then Tesco, Marks & Spencer and Asos on Thursday.
