While dollar stores duke it out in the United States, Britain’s discount grocers are in an ongoing price war. And on Friday, German Aldi Group set the stakes higher announcing plans to almost double its number of stores in the U.K. and invest $114 million in expanding its Warwickshire, England headquarters.
The company, which entered the U.K. market in 1990, currently has about 530 U.K. stores and plans to have 1,000 by 2021.
Aldi U.K. group managing director Matthew Barnes, said, “Since Aldi opened its first UK store in 1990, we have established a reputation as an award-winning retailer that offers the highest quality products at everyday low prices. This is driving our growth and we are rapidly expanding to meet customer demand.”
Aldi’s announcement is another indicator that no frills discount retailers, like itself, Lidl and Poundland, aim to lure shoppers away from more established supermarkets like Walmart’s Asda, Tesco, Sainsbury’s and Morrisons, with cheaper prices and convenience.
The Guardian reported that Aldi currently controls 5 percent of the U.K. grocery market, 3.7% increase from one year ago. Market analysts Kantar Worldpanel said sales are growing close to 30 percent and that more than half of British shoppers now buy at least some goods at discount stores.
In an attempt to cut down on discounters’ market share and win back shoppers, Morrisons chief executive officer Dalton Philips announced in March that the company would reduce prices by $1.6 billion over three years. In August, the company reported a 30 percent increase in sales of products which have had its prices reduced on average 17 percent.
Likewise, Tesco, which has issued three profit warnings in the last two and a half years, has invested $1.62 billion in store renovations and promotions to keep shoppers coming back.