Lidl will create 4,000 new jobs in Britain in the next four years and add 100 stores, continuing its brick-and-mortar expansion as competitors target deliveries.
The low-cost supermarket, which does not offer delivery services, had previously stated that it would expand from 880 to 1,000 stores by the end of 2023. On Wednesday it increased that to 1,100 by the end of 2025, effectively continuing the pattern of adding 50 stores a year for a further two years.
It added that it would seek sites in town centres, retail parks and metropolitan locations but Christian Härtnagel, Lidl chief executive, said there would be no particular geographical focus, adding: “We need more stores up and down the country.”
He revealed that the expansion programme would be funded by significant additional equity investment from Lidl GB’s German parent — a total of £267m during its financial year to February 2021 and a further £128m in June.
Lidl has long maintained that ecommerce is not compatible with its limited-range, low-cost operating model.
Instead, it has focused on persuading customers to spend more on each store visit; the Lidl Plus loyalty app launched during the financial year offers lower prices to holders plus an additional discount if they spend more than £200 a month.
Härtnagel said the company was well prepared for Christmas and had overcome the supply challenges of the summer. “In a normal store on a normal day, there are no obvious gaps . . . there are no systemic issues any more.
“But it is still nowhere near normal. There are labour shortages everywhere . . . everything is much harder work than in a normal year.”
In response, Lidl is raising pay rates across its operations; in-store staff will receive £10.10 per hour outside London from April next year, making it the second supermarket to break the £10-an-hour level.
Härtnagel said the company was ready for another round of Brexit bureaucracy in January, when customs declarations on produce arriving into the UK from the EU will be required, and that the experience of the wider Schwarz Retail Group — Lidl’s owner — was valuable.
“They have stores in Serbia, in Switzerland . . . they are very used to dealing with these issues,” he said, referring to countries that are outside the EU but do much of their trade with the bloc.
For the year to the end of February 2021, a period that included the peak impact of the pandemic, Lidl GB reported sales of £7.7bn, a 12 per cent increase on the previous year. That was slightly higher than the 10 per cent rise rival Aldi managed for the year to December 2020.
Both discounters recorded slower sales growth in the early stages of the pandemic, as shoppers switched to online ordering and preferred to do single large shops in bigger supermarkets where social distancing was easier.
Even as the vaccine rollout progressed and shoppers became more confident, they have struggled to recapture previous rates of market share growth; in the 12 weeks to October 31, Lidl sales were flat and Aldi fell 0.4 per cent, according to Kantar data, although this was still a better performance than all the established supermarkets except Tesco.
Lidl’s pre-tax profit was £9.8m after repayment of £100m of business rates relief, compared with a loss of £25m in the previous year.
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