Aldi to open low-cost outlets in Ireland

ALDI, the privately owned German supermarket chain, is opening two low-price outlets in Dublin and Co Cork next month, in the first phase of an expansion into Ireland in which it plans to open up to 100 stores in the next ten years.

The company plans to invest £10-£20 million (€13-€25 million) on between eight and 10 outlets throughout the State in the next year and a half. It also intends to develop a regional distribution centre in Dublin in 2001 at a cost of some £15-£20 million.

In the medium term, the company plans 30 to 40 outlets throughout the State.

A separate operation will be set up in the North, where the company is seeking planning permission to develop sites at Enniskillen, Co Fermanagh, and Newtownards, Co Down.

Aldi has committed between £2 million and £4 million in the development of its outlets on Parnell street in Dublin and in Ballincollig, Co Cork, this year. Planning permission has been secured to develop a site in Letterkenny, Co Donegal, and plans to open a store in Longford are also well advanced. Both outlets will be opened before next Easter. Outlets in Limerick and Galway are also planned, as well as in Dublin. Overall, Aldi plans about 10 stores in Dublin in the medium term. The company has already recruited a team to develop its business, including district managers, with responsibility for clusters of outlets, and individual store managers. In the first phase, Aldi will source product from its distribution centre in Manchester.

The operation will be headed by a regional manager, Mr Patrick Boyle, who has been with the group for 10 years. Mr Boyle, who is from Donegal, is currently regional manager at Aldi's Manchester division.

Overall, the group has developed 250 outlets since entering the British market 10 years ago. It has some 600 stores in the US.

Aldi, which employs over 50,000 workers in 5,000 outlets in Europe, the US and Australia, will finance its expansion from its own funds. The private firm does not reveal annual turnover and profit figures.

The company is seeking to purchase freehold sites, although its first outlets in Dublin and Cork are leased. Aldi's expansion is understood to have been delayed due a backlog in the planning process at local authority level. The company has been planning its move into Ireland since early last year. Aldi, which is committed to organic growth, is not seeking to acquire existing supermarket businesses in Ireland.

The firm specialises in a limited range of 550-600 own-brand products, which it trades under exclusive branding arrangements with its suppliers. Each product has its own brand name, exclusive to Aldi. This is different from other supermarket chains, which combine a product mix of branded and own-brand goods under a single own-brand.

Aldi claims that a typical basket of goods is on average 30 per cent less expensive than rival supermarkets. The company claims these savings are derived from its streamlined management and distribution structure. It pledges to adhere to regulations which prohibit below-cost selling.

The product range comprises core food and domestic products, including canned, packet and baked goods, dairy and milk products, fruit and vegetables, frozen food and wine. The company sees itself as complementary to specialist retailers. For example, its initial product range will include only two meat products, which are frozen.

About 60 of the 500 products which Aldi will sell in its first two Irish outlets will be sourced from Irish companies.

Aldi's business with Irish suppliers of fruit, vegetables, poultry, bacon and bread makers is expected to be worth £80 million next year. It is also actively seeking contracts with other quality Irish suppliers.

The company will employ 12-15 workers at each of its supermarkets. Staff, many of whom will work part-time, will be hired on permanent contracts.

The Irish division will be part of the Aldi South group which trades in Australia, the US and Britain. The group's operations in the rest of Europe trade as Aldi North.