Aldi says it is to raise its minimum wage levels following a record Christmas in the UK.
The German discounter, which is the fifth-biggest supermarket in Britain, reported sales growth of 15% in December compared with the previous year – with total annual sales in the UK and Ireland hitting £10bn for the first time in 2017.
It claimed there was clear evidence of shoppers “switching” to its offering over the festive season as it continued to pile the pressure on more established rivals such as Tesco, Sainsbury’s, Asda and Morrisons.
In the first Christmas trading update in the sector, Aldi reported particularly strong demand for its “specially selected” premium range.
It said mince pies, Aberdeen Angus beef roasting joints and Irish cream liqueur were among the top-selling products.
More than 6.8 million bottles of wine, champagne and prosecco were sold during December alone.
However, the chain, which has expanded aggressively, gave no breakdown of sales on a like-for-like comparison basis or any hint about profitability as its bigger rivals listed on the stock market are required to do.
It did announce a pay rise for its store assistants – saying it would make Aldi the “highest paying supermarket”.
Aldi said it was to roll out a new minimum hourly rate of £8.85 nationally – a rise of 32p – and £10.20 in London from 1 February.
The retailer, which has 762 stores in the UK, also reiterated its long-term strategy to have a network of 1,000 by 2022.
Image: Matthew Barnes sees expansion at the heart of Aldi’s plans
Chief executive of Aldi in the UK and Ireland, Matthew Barnes, said: “We see significant capacity for further growth as there are still more than 400 towns and cities across the UK without an Aldi store.
“Shoppers in these areas consistently tell us they would shop at Aldi if they could, and we are committed to meeting this demand for new Aldi stores.”
Commenting on the chain’s trading update, senior retail analyst at GlobalData, Molly Johnson-Jones, said: “The announcement of wages continuing to increase will eat into profits.
“Aldi’s full- year operating profit fell 17.1% for FY2016, driven by Aldi experiencing the same input inflation pressures that we have seen across the UK food & grocery sector throughout 2016 and 2017.
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“Aldi needs to focus on sweating assets through 2018 to improve margins up from the 2.4% that we estimate they currently were for 2016.
“Food inflation is expected to remain above 2.5% throughout 2018, which will continue to drive consumers to switch to the discounters.”