Aldi And Lidl Threaten Supermarket Giants

March 9, 2018

Discount supermarkets Lidl and Aldi to expand through 2018. Expansion plans from Lidl and Aldi are likely to hit mainstream supermarket chains hard through 2018. After achieving record-breaking UK sales in December 2017, Lidl has confirmed its spot as the UK’s quickest growing grocer.

The supermarket chain hit its target of achieving 700 UK Lidl stores on February 8 2018 when it opened five stores in one day. Lidl plan to open a further 19 stores during the first two months of 2018 and achieve 50 new outlets by the end of the year. Supermarket discount store Aldi already operates over 750 stores and plans to open 70 more in 2018, with a target of 1,000 stores by 2022. Mainstream supermarket chains Sainsburys and Tesco are currently in the process of evaluating cost-saving measures, such as job cuts or store closures, as a result of competition from discounters such as Aldi and Lidl.

Lidl’s expansion plans

Lidl’s first UK store opened in 1994 and it now has a 5% market share and employs over 22,000 staff. Aldi has a 6.9% market share, with over 30,000 employees. Lidl had already announced plans to build its largest UK warehouse in January 2018 and looks on target to meet aims of investing £1.45 billion in the UK through the 2017-18 accounting year.

The new warehouse will be situated at J11A on the M1, close to the Bedfordshire town of Houghton Regis. The new 1-million square foot warehouse will be Lidl’s largest distribution centre and double the size of any of its other UK facilities. It’s anticipated the warehouse will create up to 1,000 new jobs in the area. The new warehouse is located on a 58-acre site and will be critical for servicing Lidl’s expansion plans in the Greater London area and M25 conurbation.

How To Profit From Grocery Sector

Both Lidl and Aldi are private, family-owned businesses, so it’s not possible to buy their shares on the open market at this moment in time. That does not mean however, that their expansion does not create other opportunities

Traders looking for investment linked to both these discount supermarket chains might want to consider checking out shares of their suppliers as a way to profit from these promising expansion plans. The supermarket chain Morrisons has taken on board many of the discounting features offered by Lidl and Aldi and is moving along similar lines, at present Morrisons’ shares haven’t increased substantially but as begin to challenge the discounters more frequently this could change.

Given the cost-cutting exercises Tesco and Sainsburys are currently undergoing, shorting their share price via CFDs or perhaps even binary options is one way to speculate on discount brand growth. Asda announced decent figures more recently, so shorting Walmart is a more dangerous option.

Live price chart


BBC Business

BBC Local – Beds & Bucks