Aldi and Lidl are focusing their expansion on the capital more than ever before. We look at the store opening targets in more detail and the benefits and challenges of trading in London.
Source: IGD Research-Aldi Little Venice
Aldi will be investing £22m in new and upgraded stores in London in 2021. This includes nine new openings. The investment is part of the wider Aldi pledge to invest £1.3bn in new stores and distribution centres in the UK.
The retailer has said it is on track to have 100 London stores by 2025. This was a target that was first announced in 2019 when Aldi had 45 stores in the capital.
Aldi has adapted its proposition to appeal to the city shopper in its London stores, for example adding self-service checkouts and ready to eat meal solutions being displayed near the store entrance. Subscribers looking for more can see our store visit report; Aldi Local Balham: flexing the standard Aldi proposition to suit the London market.
Source: IGD Research-Aldi Little Venice
Source: IGD Research-Lidl Tottenham Court Road
In February Lidl opened three stores in London (Richmond, Putney and Tooting) as part of its £500m investment in the UK. The Totting branch is replacing an old store, and the Putney store at 6,000sqf will be one of the smallest stores in Lidl’s estate. Despite the smaller size, all three will have in-store bakeries. This is a strong point of differentiation at Lidl, particularly from other convenience stores that may not offer this service.
Source: IGD Research-Lidl Tottenham Court Road
Subscribers looking for more can see our store visit report; First look: Lidl Tottenham Court Road, London.
Source: IGD Research-Lidl Tottenham Court Road
There are significant challenges to operating in the capital, which is why it has not been an area of focus for the discounters in the past. Both Aldi and Lidl have a strong preference for greenfield sites that they can completely control, building a new store and car park. There is a distinct lack of availability of these sites in London. Instead, the sites available usually lack car parking space, are small, and have high rents. Due to this the discounters have had to adapt their standard proposition. This includes changing the range to suit the environment. For example, as more shoppers will be on foot rather than in a car, no special buys are in the range. These added complications, inevitably mean added costs for the retailers that traditionally have one approach for all stores.
However, London also offers the discounters great opportunities for growing their presence. Prior to the pandemic, central London locations were places with high footfall. Many of the new stores are situated in prominent locations such as Lidl Tottenham Court Road, which is very close to University College London and two busy tube stations; Warren Street and Euston Square. Or Aldi’s Balham store, which is located on a busy street with many retailers, and next to Balham station. Stores that are close to busy transport hubs are great for catching people on their way home from work, or on their lunch break. They are also great locations to catch the eye of new shoppers and help the discounters extend their reach.
Aldi’s long-term target is to reach 1,200 stores in the UK by 2025 and Lidl’s is to reach 1,000 stores by 2023. Both retailers look set to reach these targets, with their current opening rates of between 35 and 50 stores a year. New store openings will continue to take place in other areas of the country too.
Although we do not know the discounters plans for when they reach these targets, rapid expansion is likely to continue. According to Food First Consulting, in the UK there is currently around 25,000 shoppers per discount store, whereas in Germany, there is around 5,000 per store. This shows the discounters are not close to saturation point yet.
Read our opinion piece on the five reasons why Lidl is winning the discounter battle.
For subscribers;
See our insight presentation on how European discounters are expanding in urban locations.
Aldi and Lidl are focusing their expansion on the capital more than ever before. We look at the store opening targets in more detail and the benefits and challenges of trading in London.
Source: IGD Research-Aldi Little Venice
Source: IGD Research-Lidl Tottenham Court Road Subscribers looking for more can see our store visit report; First look: Lidl Tottenham Court Road, London.