A spending boom by
Aldi and Lidl is benefiting regional contractors.
The two German
discount supermarkets are building hundreds of new stores and discount
warehouses across the UK and are among the construction industry’s top 20
clients according to Glenigan’s construction market research.
Aldi plans to build 130 new stores over the
next two years, including eight in Scotland to take the group’s outlets
north of the border to 93 by the end of this year.
In 2018, Aldi was one of the fastest risers
in Glenigan’s ranking of the construction industry’s top 100 clients
after awarding £228.9 million-worth of contracts. This figure was more
than double the total for 2017 and lifted Aldi from 77th position up to
19th place in 2018.
Lidl was one place
lower in twentieth place in the 2018 top 100 after letting £228.1 million-worth
of work and is undertaking a major expansion around London.
In 2017, Lidl
announced plans to spend £1.45 billion on building up to 60 stores over the
next two years and more than 20 retail warehouses around the M25.
Overall, the top 10
grocers awarded £818 million-worth of construction contracts in 2018, which was
down 3% on the previous year.
Aldi and Lidl were
responsible for 56% of the latest total construction spend, but the only other
leading supermarket chain to feature in the top 100 is the Co-operative Group
in 35th place.
The other four
leading supermarket chains – Asda, J Sainsbury, Tesco and Wm Morrison – are
fading from view as clients on major projects.
Developers working
on retail-led projects such as Roxhill feature amongst the construction
industry’s leading clients but no other grocery chain features in the latest
top 100.
Aldi and Lidl are
spending more than the four traditionally biggest supermarkets, but most of the
leading grocers have one strategy in common.
The days of spending
on major out-of-town stores has gone and the focus is now on smaller projects.
Among the top 10
grocers, Aldi is, on average, building the biggest projects according to
Glenigan’s construction market research.
The average size of
construction contracts being awarded by Aldi has more than doubled between 2017
and 2018 in line with the group’s construction spend, but in 2018 the average
major contract awarded was still only valued at just under £3.5 million.
German rival Lidl
and the other leading grocers undertook far smaller building projects and many
have got smaller.
Wm Morrison, John
Lewis, Marks & Spencer and Tesco all commissioned smaller construction
projects in 2018 than in 2017 according to Glenigan’s construction industry’s
analysis.
Even though the size
of the average contract let by Iceland leapt by 45% last year, this was only to
just over £700,000, which was the smallest among the top 10 grocers.
This shift towards
smaller contracts and developments is benefitting small-to-medium sized (SME)
regional contractors, such as Stepnell.
The Rugby-based
contractor’s appointment by Lidl last year to build a £3 million 2,460 sq m
store in Loughborough was the fifth project awarded to Stepnell by the German
supermarket.
Glenigan’s
construction research shows a host of other SME contractors, such as Adston,
Camford and Projekt Construction, also working for the two German retailers.
Dawnus worked
regularly for Lidl and the Welsh contractor’s slide into administration in
March will open up more opportunities for SME contractors as the two German
discounters roll-out their sizeable construction programmes.
