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Aldi to open new UK store every week as profits hit by price cuts and expansion

Aldi and fellow German discounter Lidl have been chipping away at the market share of the UK’s big four as they draw customers in with low prices and open new stores.

Tesco PLC -

The UK’s four biggest supermarkets face losing further market share to Aldi after the discount grocer announced plans to open a new store in the UK every week on average for the next two years.

Aldi has an 8.1% share of the grocery sector, making it the fifth largest supermarket behind Tesco PLC (LON:TSCO), J Sainsbury PLC (LON:SBRY), WM Morrison Supermarkets PLC (LON:MRW) and Asda.

However, Aldi and fellow German discounter Lidl have been chipping away at the market share of the UK’s big four as they draw customers in with low prices and open new stores. 

Aldi boss Giles Hurley said the retailer would invest £1bn to meet its target of rolling out 1,200 stores by 2025. The total estate now is 840.

"The reality is that almost 50% of the population of the UK doesn't currently shop with us and they tell us the main reason for that is that they don't have a store near us," he told the BBC.

Hurley made the remarks as the company reported sales growth but a drop in profits for the year to 31 December 2018.

Sales in the UK rose 11% to £11.3bn as customer numbers increased 5% to 16.6mln.

Operating profit declined 26% to £198mln, dented by price cuts and the group's expansion.

Aldi said the price advantage over the big four was 24% on an average basket of everyday items, which dragged down the operating margin to 1.75% from 2.6% last year.

As part of the expansion plan, Aldi said it will increase store numbers in London from 45 to 100 by the end of 2025.

“London shoppers regularly tell us they would switch to Aldi if there was one nearby, so there is clearly a significant growth opportunity for us in the capital,” Hurley said, adding that Aldi’s London market share is just 3.4%.

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