Discounter Aldi plans 300 million pounds UK store revamp

The British arm of German discount supermarket Aldi plans to spend 300 million pounds revamping its stores, stepping up the challenge to rivals in the midst of a price war that led to a second straight fall in annual profit.

The firm said on Monday its goal to have 1,000 UK stores by 2022 was on track and future capital spending plans were unaffected by Britain's vote to leave the European Union.

Aldi, whose sales have doubled over the last three years, said it had cut prices on 30 percent of its products so far in 2016, with that investment made possible by the strength of its balance sheet, which had net assets of 2.1 billion pounds at the end of 2015.

Aldi and its German discount rival Lidl have transformed the competitive landscape in UK food retailing over the last five years and remain Britain's fastest growing supermarkets with a combined market share of 10.8 percent, according to the latest industry data.

With their low price, limited assortment, low cost strategy they have won market share from Britain's traditional big four players - market leader Tesco, Sainsbury's, Asda and Morrisons - forcing them to fight back by lowering prices, improving product quality and boosting customer service and store standards.

For the year ended Dec. 31 2015 Aldi made an operating profit of 255.6 million pounds, down from 260.3 million in 2014.

Sales, however, increased 12 percent to a record 7.7 billion pounds as the discounter opened new outlets.

Aldi said it increased the proportion of products sourced from British suppliers to 77 percent from 69 percent in 2014.

The 300 million pounds store investment plan includes newly designed fixtures for beers, wines and spirits, fresh produce and baby and toddler ranges, as well as a new food-to-go area.

Stores will also have a significant increase in chilled space, new colours, signage and lighting.

Chief Executive Matthew Barnes said customers had told the firm they wanted to be able to shop Aldi stores more easily.

"We've listened and we're evolving our format for new and existing stores to deliver this, while staying true to our core principle of efficiency," he said.

Aldi currently trades from 785 stores in the UK and Ireland, and has 70 new sites scheduled for 2017.