Lidl set for major expansion as price pressures from inflation grow

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The move will see Lidl recruiting 4,000 new members of staff and opening an average of one new store a week to reach its target by 2025. Around 220 stores will be opened in all areas of the UK. Speaking to Lidl GB CEO Christian Härtnagel said “we are investing significant amounts of money, £500m just last year, into this expansion driver”. Mr Härtnagel said his worries about supply chain issues had “significantly reduced” adding that the supermarket was in a “much better place now”.

He raised some remaining issues with labour, transport and packaging shortages but remained confident these would not interfere with the store’s Christmas offerings.

Another threat to Lidl’s low cost business model may come in the form of inflation, with many fearing growing costs for manufacturers will increasingly be fed through to customers.

Market research by the British Retail Consortium suggests three in five retailers expect Christmas prices to increase.

Mr Härtnagel admitted: “Inflationary pressure is definitely on, it’s definitely on us as a business, we see it everywhere in transport, in raw materials in labour costs, in energy.

“I mean we’ve just driven our own labour costs up on purpose by an average six percent.

“Last week was the biggest announcement of salary increase for our colleagues.”

Lidl recently announced it would spend around £18m increasing pay packets with some workers now getting up to £12.25 an hour.

The move comes as many employers have had to start looking at salary increases in order to help fill vacancies which have climbed to record levels nationally.

Mr Härtnagel said Lidl had an “unwavering commitment” to low prices but acknowledged the challenges the discounter faced.

He added: “We’re working extremely hard every single day to keep that (food price inflation) as low as possible but we’re facing the same inflationary pressures as everyone else.”

Lidl’s financial results published today show a strong performance for the company with revenues climbing 12 percent to reach £7.7bn for the 12 months ending in February.

Despite the rise in online sales driven by the pandemic Lidl is sticking rigidly to a strategy of opening more physical stores.

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Mr Härtnagel said: “We’re 100 percent confident of our bricks and mortar strategy.”

He cited £4m worth of switching gains from rival supermarkets’ online offerings to Lidl in the last 12 weeks.

However he added “digitalisation of the shopping experience, this is going to absolutely be a priority for us going forward” and that the group were watching rivals like Amazon closely.

Amazon has also begun to embrace the high street opening a number of till-free grocery stores with an eight recently announced in London.

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