UK discounters expand as supermarkets lower prices

The food retailing battle in the UK is heating up as discounters make aggressive expansion plans while supermarkets focus on private label and promotions to win back lost market share.

Aldi’s UK managing director foresees that the discounters may eventually capture 20% of retail sales, up from the current 6%. Aldi now has 460 stores across Britain and Ireland and plans to continue opening around 40-50 stores a year, with an ultimate goal of about 1,500.

Aldi sales in Britain climbed 25% in 2008. Aldi said its success was not just a result of the economic downturn, but stemmed from an emphasis on more fresh foods, larger stores, and the introduction of a premium Specially Selected range.

The other big UK discounter, Lidl, plans to add 50 stores this year, one more than last year. Part of that expansion will come through the purchase of stores from other retailers. The discounter will be using a smaller store format to enter more urban areas. It has opened 10 stores of 200 to 500 sqm and another 10 stores are planned for this year.

Meanwhile supermarkets are hoping that their new value ranges will grow popular as shoppers looking to save money. Tesco says 25% of its customers have tried its new discount ranges. Sainsbury reports big increases in its value line, while Spar plans to revamp its entire 900 SKU range with an emphasis on offering “value”.