Aldi online launch seen as ‘major worry’: analyst

By Alice Foster contact

- Last updated on GMT

Aldi saw a 30% increase in group sales but a 4% fall in operating profit in 2014
Aldi saw a 30% increase in group sales but a 4% fall in operating profit in 2014

Related tags: Online shopping, Supermarket, Aldi

Aldi’s move into online shopping will be a “major worry” for other supermarkets offering home delivery, according to a leading analyst.

The discount supermarket announced the launch of online sales next year after a 30% increase in group sales but a 4% fall in operating profit in 12 months to December 31 2014.

Begbies Traynor partner and retail expert Julie Palmer described the results as “disappointing”​ but said shoppers still love the discounter’s growing range of products.   

‘Another string to its bow’​ 

“With new online sales channels launching in 2016, Aldi adds yet another string to its bow that will be a major worry to the likes of Ocado, Sainsbury and Tesco, who have so far been leading the way when it comes to home delivery,”​ she said. 

Results: 2014, compared to 2013

  • Operating profit: Down 4% to £260M
  • Group sales: Up 30% to £6.89bn
  • Annual investment: Up 60% to £438M

The grocer has announced plans to start selling wine by the case online from early next year, followed by non-food special buys in the spring. 

But Shore Capital analyst Clive Black said Aldi was not “exactly breaking new ground”​ by starting to sell wine, a long-life product, and general merchandise online. 

“Aldi seems to have caught the headlines with its aspiration to enter the UK eCommerce market,” ​he said. 

‘Leading online retail market’ 

“Whilst so we sense it will be some time, if ever, that the German group starts making serious in-roads into what is one of the leading online retail markets in the world in the UK‎.”

Black said it remains to be seen whether or not Aldi would be able to offer an online grocery proposition in the future. 

“With a limited range, low proprietary brand participation and low average basket sizes with keen prices, we’re not convinced that Aldi can offer a compelling grocery offer online; delivery costs could be debilitating to channel profitability. Time will tell,” ​he said. 

Aldi UK & Ireland ceo Matthew Barnes described the online launch as another “exciting chapter”​ in the discount grocer’s development. 

“This will enable us to introduce the Aldi brand and some of our best-selling, best-quality and best-value products to thousands more customers across the UK.”

View from Begbies Traynor

“With new online sales channels launching in 2016, Aldi adds yet another string to its bow that will be a major worry to the likes of Ocado, Sainsbury and Tesco.”

  • Begbies Traynor partner and retail expert Julie Palmer 

 

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