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Aldi's UK love affair

September 29, 2014

In the UK, German discount supermarket Aldi has posted a more than 65-percent rise in 2013 pre-tax profit on record turnover. It comes as the big four UK rivals are losing market share, and Tesco overstated its profits.

Bildergalerie Aldi - Aldi-Filiale in Manchester
Image: picture-alliance/dpa

Aldi's 2013 pre-tax profits for its UK division shot up 65.2 percent to 261 million pounds ($424 million, 334 million euros) on turnover of 5.272 billion pounds, a record high, Aldi UK said on Monday.

The retailer, which was founded in the early 1950s by the Albrecht brothers in the western German town of Essen and initially called "Abrecht Discount,"has managed to grow its market share in Britain to just under 5 percent, encroaching on the big four's - Tesco, Asda, Sainsbury's and Waitrose - territory. Aldi is now Britain's seventh-largest grocer, according to data from market reseracher Kantar Worldpanel.

"We work efficiently and responsibly to reduce operational costs. Rather than use these savings to boost margins, we lower prices at the checkout," joint group managing director Roman Heini said in a company statement.

Efficiencies include what the company calls "shelf-ready packaging," meaning that products are displayed on the pallets that they are being delivered in - an initially unfamiliar sight for British shoppers that they now seem to be getting used to.

Flashback: Discount Grocery Chains

Aldi also prides itself on its "most cost-effective logistics operation," according to Monday's statement.

Tesco profits muddle

Rival Tesco, which has long dominated the UK market but is now losing market share, had to admit last week that it overstated its first-half profits for 2013 by 250 million pounds ($408 million), wiping 2 billion pounds off the grocer's stock market value.

There have even been calls for a parliamentary investigation, with Adam Bailey, chairman of the Business Innovation and Skills (BIS) select committee, calling the overstatement a "stratospheric error" on BBC radio last week.

According to Kantar Worldpanel data, Tesco has dropped to fifth from second place in the market research company's global retail ranking. Wal-Mart is the world's biggest retailer, according to the ranking.

Germany's Schwarz Group, which owns discounter Lidl and also has a growing UK presence, has moved up to fourth place.

Aldi, meanwhile, plans to continue its expansion program, with 54 new stores scheduled to open in 2014. It opened 42 new branches in the UK in 2013.

ng/uhe (Reuters, dpa)