Discounter Aldi's plans to expand more into the convenience market in the UK makes sense, but the retailer is still 'playing it safe' when it comes to choosing locations, a leading property analyst has said.
Richard Curry, partner in the Retail & Leisure Group at property and planning consultancy Rapleys was commenting following the announcement that Aldi sees the potential for as many as 50 smaller-format Aldi Local stores in the Greater London area.
It currently operates eight such stores.
Prime Locations
“Aldi’s numbers and ambitions are impressive on paper, but they are still playing it fairly safe when it comes to their convenience offering, with a clear prioritisation of prime locations in London and the South East," Curry commented.
"Aldi’s convenience product, Aldi Local, is still in its nascency and it’s a no brainer when building a portfolio and an offering to start where the footfall is high and where there is confidence in customer appetite."
Aldi, along with fellow discounter Lidl, have long relied on a combination of efficiency and ease of shop, with the focus very much on volumes, said Curry, meaning that convenience was always likely to be "the logical next step" in their development.
"The big question is, what part of the product range will be sacrificed in order to deliver within the smaller store footprint. This may be one of the reasons why we haven’t seen Lidl make the jump into convenience just yet," he said.
'Element Of Caution'
More generally, Curry pointed to an "element of caution" pervading food retail in the UK at present.
"The retail economy as a whole is undergoing huge structural shifts and supermarkets are not immune," he said. There is a real focus on optimising the customer experience and seeking new ways to integrate with customer lifestyles, including through technology and partnerships to provide solutions and the infrastructure to deliver."
In addition, while Aldi has thus far proven itself to be a dynamic operator in the UK, the c-store market is not without its challenges.
“Convenience stores are still costly to open, and require a high level of investment to fit-out appropriately," Curry said. "Food retailers therefore will often need to take out longer leases to offset costs. On the one hand this makes them an attractive operator for landlords but, on the other, means they are less able to flex and evolve in tune with changing consumer demands.
"It is likely that food retail will continue to form part of the high street of the future, but what will be key is the experience, amenity and infrastructure which surrounds it – enabling customers to shop in way that fits with their lifestyles.”
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
