Katy Askew

Lidl to up expansion rate in UK

By: Katy Askew - 2 December 2013 17:11

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News that Lidl wants to more than double its number of stores in the UK within the next three years could signal competition is heating up further still in what is already a hotly-contested market.

The retailer has 600 UK stores, commanding a 3% market share. It is eyeing taking that network to at least 1,200 outlets, Ronny Gottschlich, MD of the German grocer's UK arm, said at the weekend.

The chain plans to step up the rate of store openings and increase the pressure it is putting on the "big four" - Tesco, Sainsbury's, Asda and Morrisons.

In an interview with The Sunday Telegraph, Gottschlich said Lidl expects to spend around GBP170m in the UK this year. Annual investment is likely to rise to GBP300m within two years as Lidl accelerates from opening 15 to 20 stores per year to at least 30 to 40 stores.

"There are no restrictions to the openings we can do in a year. The funding is there," he said.

The bulk of that spend will be on store openings, but the group is also planning to introduce in-store bakeries at its existing locations in order to increase its mainstream appeal.

Here in lies the key to Lidl's success in the UK. The retailer has gone from being viewed as a bargain basement outlet pedalling a random assortment of products shipped in from Europe to a supermarket operator with mainstream - albeit still value - appeal.

Lidl has adjusted its ranging strategy and increased its focus on fresh products, including significant investments in expanding its meat and poultry offering.

And it is that kind of investment that has helped Lidl grow its share of the UK market. It accounts for 3% of sales, low compared to the likes of Tesco and Asda, but its double-digit growth rate will be causing furrowed brows at its larger rivals.

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