Sales and customer numbers up; price shielding strategy and increased costs impact margin
ALDI reaffirms commitment as the first Irish supermarket to publish its financial results
Store expansion programme, impacted by planning approval delays, set to continue
Changing shopping habits accelerated by cost-of-living crisis here to stay, says ALDI Ireland boss
Retailer ALDI has said the changing habits of Irish grocery shoppers, accelerated by record inflation levels, are here to stay.
The company was commenting as it published its financial results for 2022, outlining another year of record sales and customer numbers, despite overall profitability for the period being down as the company’s price shielding strategy and increased cost base impacted margin.
This is the third successive set of annual results ALDI has published in Ireland, becoming the first supermarket to do so in 2021. In the 12 months to December 2022, ALDI’s turnover in Ireland grew by a further 1.1% to €2.032 billion, up €24 million on 2021.
The company said its profit reduction in 2022 reflects the retailer’s ongoing focus on balancing the considerations of colleagues, customers, over 330 Irish suppliers and the company. During the trading period, inflation increased by an unprecedented 15%* in 2022, which is reflecting rising wages, higher energy costs, and rising input prices among suppliers.
Capital Investment Continues
Its footprint increased again in 2022 with six additional stores opened in Caherciveen, Clonakilty, Ballina, Tuam, Mountbellew and Ardee, while store refurbishments were completed in Dungloe, Blessington, Greystones, Killorglin and Elysian Cork. Its number of stores nationwide now stands at 160, with plans continuing to increase this further.
Changing Shopping Behaviours
Highlighting changing customer behaviours over the trading period, ALDI referenced independent analysis which identified a number of notable changes in consumer purchasing trends as shoppers sought to manage the challenges presented by inflation.
People are shopping around more regularly, but buying less, with more consumers choosing to purchase own label brands rather than eliminating the product entirely from their shop. The retailer notes that there has been a 7%** swing in favour of own label products during 2022, which compliments the discounter, as over 95% of its range is own label.
Commenting on the company’s 2022 performance, Niall O’Connor, Group Managing Director, ALDI Ireland said the results reflect ALDI’s steadfast commitment to staying true to its discounter DNA. He said:
“2022 was the year that solidified the changing nature of how we shop. Households, gripped by higher living costs, now buy more own label and smaller pack sizes, shop more often but buy less, and with an even greater emphasis on value. In this climate, ALDI’s ‘we won’t be beaten on price’ commitment continued to resonate, reflected in our rising sales and customer numbers in 2022.
“We signalled from the very start of the inflationary surge that we would work hard every day to provide the best value in the market for our customers. Just as our customers and suppliers faced rising costs day-to-day, so did we. Despite these rising costs, we took the decision to continue to invest in our people, store expansion and sustainable stores refit programme, while mitigating the worst of the rises on our customers. We knew it was an approach that would impact our profitability, but over the medium-term, it will continue to prove the right one.”
Commenting on inflation trends in the sector, Mr. O’Connor said:
“The signs are encouraging. While the overall inflationary peak of last year is receding, food inflation continues to be stubbornly high here at home and abroad. Factors such as supply chain complications and delays due to the war in Ukraine are indeed relevant. Notwithstanding, we have demonstrated through price decreases on own brand products that where cost conditions improve, we will move quickly to cut prices. Earlier this year we cut prices on family staples like bread, milk and butter. As schools returned in September, we cut prices further on a range of products. We will continue to monitor the backdrop and respond proactively as we enter what is typically a very busy Christmas shopping period for consumers.”
“Research indicates that families are struggling with higher costs on multiple fronts, making it more important than ever that we stay shoulder-to-shoulder with them. Through the ongoing expansion of our store footprint, we remain committed to offering the best value convenient to shoppers in every part of the country. In a community where an ALDI store opens, shoppers benefit from €78,000 each month in grocery savings while our suppliers benefit monthly to the tune of €1.7 million. Our commitment to never being beaten on price means that we will continue to provide the best value without compromising on quality.”
In September 2023, ALDI announced new contracts with four suppliers, bringing ALDI’s spend with over 330 Irish suppliers to more than €1.1 billion annually. Additionally, ALDI recently committed to the new 2024 Living Wage, reaffirming its commitment to being Ireland’s best paying supermarket.
*Kantar, 12-week data, 25 December 2022 v 26 December 2021.
**Kantar, 4-week data, 22 January 2023 v 23 January 2022.
Campaign launches as retailer reaches 3 million meal donations