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ALDI CONTRIBUTES OVER £8.5BN TO UK ECONOMY, A GDP ‘FOOTPRINT’ THAT IS SET TO RISE TO AT LEAST £11.5BN BY 2022
12 Sep 2017


A new report published by the Centre for Economics and Business Research (Cebr) highlights the significant role that Aldi plays in adding value to the UK economy and supporting British businesses. 
 
The analysis shows that Aldi contributed to the generation of over £8.5bn in Gross Domestic Product (GDP)(1) to the UK economy in 2016, through job creation, spending with British-based businesses, tax contributions and capital investment. This is set to grow to £11.5bn by 2022 as Aldi reaches its target of 1,000 UK stores.     
 
The report also predicts that Aldi’s growth during the next five years will provide a £2.2bn boost for British businesses, as the GVA of its UK supplier relationships will increase from £4.5bn in 2016, to £6.7bn by 2022.     
 
This increase is a direct result of Aldi sourcing products manufactured or grown in Britain whenever possible.  Last year the supermarket worked with more than 1,000 UK businesses and generated 77% of its sales from products sourced via UK suppliers. Cebr highlighted how Aldi’s focus on British-based sourcing along with its efficient ways of working, deliver unbeatable value for customers, as shoppers saved an estimated £2.2bn last year by going to Aldi instead of the Big 4 supermarkets(2).
 
Key highlights of the report include:
 
·         Aldi’s GDP footprint of over £8.5bn represented 0.5% of UK GDP in 2016. Growth in GDP achieved through job creation, spending with British-based businesses, tax contributions and capital investment
·         Last year Aldi supported 146,000(3) direct and indirect jobs across the UK, which is equivalent to a 0.5% share of total UK employment in 2016. This catalysed the generation of an estimated £4.3bn(4) in employee compensation
§  By 2022, Aldi will support at least 205,000(5) direct and indirect jobs, which would generate an estimated £5.9bn(6) in employee compensation. Employment at Aldi grew by an average of 21% annually from 2005-2016, a period that coincides with the recession, during which unemployment hit 8% in 2011/2012
·         Shoppers saved an estimated £2.2bn last year by going to Aldi instead of the Big 4 supermarkets. Aldi’s focus on local sourcing and efficient business model result in exceptional value(2)
·         In 2016 Aldi worked with more than 1,000 UK businesses, representing over 77% of the cost of all goods it sold in the UK
·         For every £100 of GVA generated by Aldi, an additional £720 of GVA contribution was generated in the wider economy in 2016(7)
·         Aldi’s activities catalysed an estimated £1.6bn tax contribution in 2016
·         Between 2005 and 2016, Aldi has invested £3.2bn in its UK stores and distribution centres. With 726 stores and nine regional distribution centres across the country the retailer will continue to find the most efficient ways of working to translate this into savings for shoppers, while multiplying the value of how much every £1 consumers spend in Aldi delivers for the UK economy. 
 
Matthew Barnes, CEO of Aldi UK and IRE, said: “For the first time, this report demonstrates how the positive impact of Aldi’s low priced, high quality products stretches beyond our stores. Our approach to sourcing as local as possible means that shoppers are able to enjoy the best value products, with the confidence that they’re supporting British companies and jobs.”
 
Aldi is the UK’s fifth largest supermarket.  The latest Kantar Worldpanel Data (12 weeks ending 13/08/2017) shows Aldi grew sales by 17.2% and it now holds a 7% share of the grocery market.  
 
Oliver Hogan, Director of Cebr, Economist and principal author of the report, commented: “Aldi’s GVA contribution of £100 generating an additional £720 is impressive, yet logical when you take time to consider the retailer’s extensive links with the wider domestic and export economy. This is driven by the efficiency and flexibility of Aldi’s business model, which is set to continue to meet the cost and competitive pressures of the grocery market. Ultimately, this will help the supermarket to sustain growth and drive prosperity for the wider economy as Aldi’s supply chain is so heavily British-based.” 
 
Matthew Barnes concluded: “We continue to invest in expanding our store network and our supply chain, as well as smart ways of working that reduce waste and drive efficiencies. As well as providing people with sizable savings on their weekly shopping, this will help further multiply the value of how much every £1 they spend in Aldi delivers for the UK economy.”
 
 
ENDS  
 
Notes to editors:
 
(1) £8.6bn contribution to UK GDP in 2016. The make-up of this aggregate economic ‘footprint’ is shown in Table 1 below, consisting of £7.2 billion in Gross Value Added (GVA) and over £1.3 billion in indirect taxes (incl. VAT).  
 
Table 1: Aldi’s UK economic ‘footprint’ in GDP terms
£8.6bn in 2016: 
 
GVA £m Direct (£m) Aggregate (£m)
ALDI's contribution through retail operation (incl. non-merchandise supply chain) 1,043 1,933
Merchandise supply chain - domestic 1,479 4,542
Merchandise supply chain - exports 102 316
Investment supply chain 172 427
TOTAL GVA CONTRIBUTIONS IN ALDI'S ECONOMIC 'FOOTPRINT' 2,796 7,218
     
VAT and other direct taxes   1,342
     
ALDI's total contribution to UK GDP (GVA + INDIRECT TAXES)   8,560

 
For every £100 of GVA generated by Aldi, an additional £720 of GVA contribution was generated in the wider economy in 2016.  This is calculated based on: 8560/1043=£8.20 - £1 = £7.20
 
At least £11.5bn in 2022:
 
  • £2,841m in the combination of Aldi’s retail operation and its non-merchandise supply chain GVA in 2022
  • £6,696m in the merchandise supply chain (domestic) GVA in 2022
  • £316m in the merchandise supply chain (exports) GVA in 2016 (this is likely to increase, justifying adding “at least” when we reference £11.5bn)
  • £427m is the Investment supply chain GVA in 2016 (this is likely to increase, justifying adding “at least” when we reference £11.5bn)
  • £1,342m is the VAT and other indirect taxes in 2016 (this is likely to increase, justifying adding “at least” when we reference £11.5bn)
 
Definition of GVA: GVA or gross value added is a measure of the value from production in the national accounts and can be thought of as the value of (gross) output less intermediate consumption. That is, the value of what is produced less the value of the intermediate goods and services used as inputs to produce it. GVA must be distinguished from and has no relation to turnover (gross output) measures, which capture the entire value of sales. By contrast, GVA captures the value added to a set of inputs by a firm on their journey from raw materials to finished consumer products.
 
The explanation of direct vs. aggregate is the same regardless of the economic indicator (be it GVA, employment or employee compensation). This is most simply explained by referring to the ratio of every £1/€1 of Aldi GVA generating XX additional for the economy - the direct impact corresponds with the £1 (or the £100 in the press release), the amount directly generated by Aldi's retail business; the aggregate impact corresponds with the sum of the £1 and the additional XX generated in the wider economy from the ratio above.
 
(2) This is based on price comparison data that benchmarks the prices of Aldi's product lines against equivalent products from the other supermarkets, including appropriate adjustments for differences in size, quantity and quality/brand. Aldi's volume sales and competitor prices were used to imagine what Aldi shoppers would have paid had they shopped elsewhere.
 
(3) More than 146,000 jobs; Table 2: Aldi’s UK economic ‘footprint’ in employment terms
 
Employment Direct  Aggregate 
ALDI's contribution through retail operation (incl. non-merchandise supply chain) 26,934 46,148
Merchandise supply chain - domestic 22,737 87,386
Merchandise supply chain - exports 1,554 5,866
Investment supply chain 2,649 6,974
TOTAL EMPLOYMENT CONTRIBUTIONS IN ALDI'S ECONOMIC FOOTPRINT 53,874 146,374
 
(4) Generated an estimated £4.3bn in employee compensation; Table 3: Aldi’s UK economic ‘footprint’ in terms of employee compensation
 
Compensation of employees £m Direct  Aggregate 
ALDI's contribution through retail operation (incl. non-merchandise supply chain) 627 1,028
Merchandise supply chain - domestic 1,068 2,844
Merchandise supply chain - exports 76 200
Investment supply chain 97 243
TOTAL  1,869 4,316
 
Note that employee compensation is an element, and normally the largest element, of GVA.
 
(5) By 2022, Aldi will support at least 205,000 jobs; Table 4: Aldi’s projected UK economic ‘footprint’ in terms of employment by 2022
 
Employment (2022) Direct  Aggregate 
ALDI's contribution through retail operation (incl. non-merchandise supply chain) 37,000 63,395
Merchandise supply chain - domestic 33,515 128,810
Merchandise supply chain - exports 761,554 5,866
Investment supply chain 2,649 6,974
TOTAL  74,718 205,045
 
(6) By 2022, Aldi will contribute to the generation of at least £5.9bn in employee compensation; Table 5: Aldi’s projected UK economic ‘footprint’ in terms of employee compensation
 
Compensation of employees £m (expansion) Direct  Aggregate 
ALDI's contribution through retail operation (incl. non-merchandise supply chain) 815 1,336
Merchandise supply chain - domestic 1,574 4,193
Merchandise supply chain - exports 76 200
Investment supply chain 97 243
TOTAL  2,563 5,972
 
(7 ) In order to run its retail business, Aldi needs merchandise to sell in its stores and the non-merchandise inputs required to run a retail business. It also requires suppliers to support its ongoing investment program. Aldi's presence thus stimulates activity in the industries that provide for Aldi's needs through its various supply chains, and this activity generates further economic impact that can be traced back to Aldi. The most significant source is through the farmers, producers and manufacturers of the merchandise sold in Aldi's stores. These suppliers place demands on their suppliers, thus stimulating further economic activity and impact through their supply chains. The ratio of Aldi GVA to wider economy GVA seeks to capture the value to the economy of all of the activity stimulated through Aldi's extensive linkages with the wider domestic and export economy. The ratio also takes account of the activity stimulated by Aldi's direct and indirect (supply chain) employees spend their earnings in the wider economy on the final goods and services required by households to sustain their ability to supply their labour.
 
About the Cebr and the economic impact report:
 
Cebr is one of the UK’s leading economics consultancies. They examined the economic impact of Aldi in the UK by analysing Aldi turnover, operating expenditure, employment and remuneration.
 
Analysis spanned the period 2014 – 2016 with projections to 2022 of Aldi’s most important impacts.
 
About Aldi:
 
Aldi is the UK’s fifth largest supermarket with over 700 stores and over 29,000 employees.
 
The company has more than doubled its market share since 2010. In the 12 weeks ended 13/08/2017, Aldi grew sales by 17.2% and has a 7% share of the market (Kantar Worldpanel data).
 
Aldi is attracting hundreds of thousands of new customers every year with its award-winning range of exclusive brands, passing low operating costs on to customers in the form of low prices.
 
In 2017 Aldi will open over 60 stores. By 2022, Aldi will operate over 1,000 stores.
 
The company’s current achievements and initiatives include:
·                Aldi offers employees the highest starting pay in the sector – at least £8.53 an hour to all employees and more to those in London. This is significantly higher than the Government’s National Living Wage.
·                Aldi’s investment in people was recognised at the Grocer Gold Awards, which celebrate outstanding achievement and practice across the grocery sector – Aldi was crowned ‘Employer of the Year’ 2017.
·                Aldi has launched a five year partnership with the Teenage Cancer Trust – its fundraising target of £5m will go towards helping the trust to reach out to every young person with cancer in the UK. 
·                Aldi was named Fresh Produce Supermarket of the Year at the FPC Fresh Awards 2017 and Supermarket of the Year at the 2016 Retail Industry Awards.
·                Aldi is the highest ranked supermarket in the Institute of Customer Services’ UK Customer Satisfaction Index 2017.
·                Aldi launched its eCommerce platform in January 2016, selling a range of high quality wines and Specialbuys – receiving approximately over 11,000 orders per week.
·                Aldi is the official supermarket partner of Team GB, and has extended this commitment to the Tokyo 2020 Olympic Games.
 
Full details of Aldi’s awards and achievements are detailed at https://www.aldi.co.uk/awards

 
View our 'Notes to Editor'