Profits at the Irish stores of supermarket chain Aldi more than halved to €17.1 million last year as the company’s policy of shielding customers from the worst effects of inflation hurt its margins.
Although sales rose 1.1 per cent to €2.03 billion, up €24 million on 2021, Aldi’s pre-tax and operating profits both plunged 56 per cent as the retailer avoided passing on much of the impact of higher costs across its business. It said the profit reduction reflected its “ongoing focus on balancing the considerations of colleagues, customers, over 330 Irish suppliers and the company”.
Aldi has 160 stores here, with 2022 seeing the opening of six new stores, located in Caherciveen, Clonakilty, Ballina, Tuam, Mountbellew and Ardee. Store refurbishments were also completed in Dungloe, Blessington, Greystones, Killorglin and Elysian Cork. Further expansion is planned.
Aldi said independent analysis had identified “notable changes” in consumer purchasing trends as shoppers sought to manage the challenges presented by inflation. Consumers shop around more regularly, but buy less, with more choosing to purchase own-label brands rather than eliminating the product entirely from their shop.
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There was a 7 per cent swing in favour of own-label products during 2022. This benefits Aldi as more than 95 per cent of its range is own label.
“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,” said Niall O’Connor, Aldi Ireland’s group managing director.
“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.”
Mr O’Connor said the signs on cooling inflation were “encouraging” and that the retailer would “continue to monitor” prices ahead of the Christmas season.
“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.
“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.”
