UK discount: Aldi 'Local', online growth and sustainability

Date : 25 June 2019

We look the continued evolution of Aldi and Lidl UK, including three key areas the retailers are focusing on.

1. Small store expansion in London: appealing to the city shopper

After the successful trial of its first 'Local' store in Balham, South London, Aldi has announced it will be opening seven more. According to The Grocer this will include a new store to open in Camden on 27th June and conversions in Archway, Eastcote, Kingston, Kilburn, Tooting and Romford.

The new stores will be around half the size of typical Aldi stores. The range will be reduced from 1,800 SKUs to around 1,500. In order to tailor the 'Local' branch to its city location, non-food 'Special Buys' and larger pack sizes have been removed from the range. Aldi told The Grocer this is to make the store easier to shop without a car. Maintaining breadth of range and space for fresh is essential, as our ShopperVista data has revealed produce is the most shopped category in Aldi.

Aldi has emphasised this is not a move to expand into convenience, and the roll out is still part of its trial. However, expansion in city centres, and particularly London is often challenging for discounters with a lack of the larger sites with car parks they typically target. Continued innovation in small formats gives the retailer more opportunity to grow its presence in these areas and target new shoppers on different missions.

There is a sizeable opportunity for growth in London, however the competition for the best sites is intense. Our ShopperVista data shows 53% of London shoppers would use an Aldi or Lidl more if there was a store closer to them. Subscribers can read more about this in our UK discounters: factors influencing growth report.

Aldi's announcement followed on from Lidl reporting it will be investing £500m in expansion in small London stores over the next five years. This will include 40 new store openings that are smaller in size to the traditional Lidl stores. The retailer has said;

"London is at the heart of our growth plans across Great Britain."

2. Developing online: growing presence and attracting new shoppers

Aldi will be extending its relationship with iForce, showing continued investment in its online platform. iForce is an Eddie Stobart retail logistics services firm that currently support Aldi delivering its non-food 'Specialbuys' and wine products. iForce has said;

"The extension of the partnership will mean that iForce can look at developing Aldi's online proposition to grow its market share across the UK."

iForce believes that the scope of Aldi's online proposition has continued to expand and with the partnership they will grow this further.

This comes after the announcement that Lidl is "actively exploring" ecommerce in the UK for the first time.

3. Sustainability: new initiatives to reduce plastic waste

After its successful plastic free trial in Scotland Aldi will be rolling the initiative out to all stores in the UK by the end of 2019. According to Aldi the trial has already saved more than three tonnes of plastic since its launch in March.

Aldi has also recently removed all plastic bags from its stores. The retailer has pledged to reduce its plastic packaging by 25% by the end of 2023.

Lidl has pledged to reduce its own brand plastic packaging by 20% by 2022. By 2025 the retailer is looking to ensure 100% of its own brand packaging is widely recyclable, reusable or refillable. It is also looking to increase the recycled content of its own brand packaging to 50% by 2025. 

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