After several years of speculation and delays, one of Germany's giant discount food retailers is finally to open its first outlet in Dublin next month.
The Aldi flagship store, currently being fitted out on Parnell Street beside the ILAC Shopping Centre in Dublin 2, will be the first of a chain of discount outlets planned for Dublin and other cities, as well as the main provincial towns.
A rival German multiple, Lidl, is also to target the buoyant Irish market in the coming months.
It is not clear whether the arrival of the two groups will provide more competition for convenience stores, such as Spar, Centra and Super Valu, or the more conventional supermarkets, such as Dunnes Stores and Tesco.
Although Lidl had been actively looking for more than 20 standalone sites in Dublin for around two years, it has been upstaged by Aldi, which found the Parnell Street store within a short period of arriving in the Dublin market.
Lidl has apparently agreed terms on a number of outlets and plans to open about six stores simultaneously early next year. Aldi is expected to pitch for up to 60 sites in Ireland.
Both Aldi and Lidl will be hoping to gain a strong foothold at the bottom end of the food market through heavy discounting on a limited range of own-brand labels. The Germans apparently operate on a margin of 3 or 4 per cent as against margins of at least 11 per cent in many of the existing outlets.
John Clohisey of the 8-12 Group which operates 85 Euro Spar and Spar stores, said he did not expect that the arrival of the two German retailers would have a dramatic affect on convenience stores, as Aldi and Lidl would be trading at the lower end of the food business. They tended to affect the multiples as they appealed to customers who consider price as the number one factor rather than range and quality.
Aldi has opened a network of 350 stores in the UK since 1990 and plans to double that number over the next few years. Last week, the company took advertisements in British newspapers to underline the cut-prices being offered. Cans of peaches were being retailed at 9p sterling; 100 grams of instant coffee, 41p; 340 grams of sweet corn, 23p; 300 gram can of garden peas, 17p. Fruit and vegetables prices were cut by half.
Spar has been rapidly expanding its operation throughout Ireland in recent years. It has increased the number of its stores from 250 in 1996 to about 330 at present, a figure that is due to rise to over 400 by next year.
The new stores in the group have come mainly from within the ranks of existing grocers.
Aldi and Lidl may also resort to taking over well placed convenience stores to grow their business, though in an ideal world they would like town centre or edge-of-town sites with over three-quarters of an acre suitable for stores of 13,000 sq ft and parking for up to 100 cars.
Aldi targets urban areas with a population of at least 20,000. The company is understood to be paying a rent of £13 per sq foot for the 12,000 sq ft outlet on Parnell Street. The store will benefit from its convenience to the ILAC centre, which is due to be redeveloped over the coming two years.
Aldi's discount grocery operation is twice as big as Lidl, with a turnover of around £18 billion worldwide. It has more than 4,000 sites throughout Europe and the US. Experts say that with monetary union it will be considerably easier for both Aldi and Lidl to develop its network of stores in Europe.
Jean Dargan of Spain Courtney Doyle acted for the landlords, South Dublin Construction, and Paul McCoy of Douglas Newman Good Commercial advised Aldi.
