Aldi UK to Invest £1.6 Billion Despite Profit Drop
Aldi UK, Britain’s fourth-largest supermarket, is doubling down on long-term growth: it will invest £1.6 billion ($2.2 billion) over the next two years to accelerate store expansion – despite a 21% drop in operating profit in 2024. The decline was driven by price cuts, higher wages, and infrastructure investment.
📊 Financial Results (FY 2024)
- Sales: £18.1 billion (slight increase YoY)
- Operating profit: £435.5 million (–21% vs 2023)
- Operating margin: 2.4% (2023: 3.1%)
- Key drivers of decline:
- Price reductions to maintain competitiveness
- Higher infrastructure spending
- Increased staff pay
🏪 Expansion Strategy
- Current store base: 1,060 in the UK
- Short term: 21 new stores in the next 13 weeks
- Medium term: 80 new stores in the next two years
- Long-term target: 1,500 stores
- Strategic goal: overtake Asda (Aldi 10.8% vs. Asda ~11.8% market share)
📈 Market Position
- Sales growth: +4.8% YoY (12 weeks to Aug 10, 2025)
- Market share: 10.8% → just one point behind Asda
- Main competitors: Tesco (market leader), Sainsbury’s, Asda
- Aldi and Lidl have reshaped the UK grocery market over the past 20 years, forcing established players to adapt.
👥 Consumer Trends
- Households remain under pressure from inflation and speculation over tax hikes ahead of the Nov. 26 budget.
- Consumer behavior:
- Shopping around more to prioritize value
- Turning to premium private-label ranges as affordable alternatives to dining out
- Aldi expects this “treat at home” trend to strengthen in the run-up to Christmas.
⚖️ Policy Environment
- Aldi UK CEO Giles Hurley urged the government to avoid policies that would increase operating costs for food retailers.
- Concern: potential tax increases could undermine consumer confidence and weaken retail spending.
✅ Outlook
- Aldi is clearly focused on long-term market share gains, not short-term margin maximization.
- With its aggressive expansion, Aldi could soon overtake Asda and become the UK’s third-largest grocer.
- Risks: weak consumer confidence, tax policy shifts, and continued cost inflation.
📌 Source: Reuters, September 15, 2025
