Monday, March 4

How will Brexit affect your supermarket? See which stores could benefit the most from Britain leaving the EU



It is a decision which will affect businesses throughout the UK. And with Britain set to leave the EU, some supermarkets are likely to do better than others in the coming months.

A new report has found that the discount stores of Aldi and Lidl are set to benefit most from Brexit .

The German discounters – which have soared in popularity with millions of shoppers across the country – could benefit more in the short and medium term from Britain’s decision to leave the EU.

The analysis by Kantar Retail says that there are a range of factors which will help Aldi and Lidl to be in a stronger position that their traditional High Street supermarket rivals.

Kantar said: “The mid-term effect of goods sourcing is likely to be the largest factor of consideration for British retailers.

“The prices of fresh produce will definitely go up as much of this is sourced from the EU.

“In the case of Tesco, for example, almost 50% of butter and cheese consumed in the UK comes from milk sourced from EU markets.

“Inflationary pressures will further boost the call for locally-sourced/manufactured products as the retailers’ ability to source from the EU suppliers offering better trade terms is adversely impacted.

“Higher commodity prices and tariffs will also impact production of traditional FMCG products, even though a significant proportion of good are produced locally.

“Supply chain costs are likely to go up due to higher trade tariffs,” said Kantar.

The report added that there are several factors which will help discounters Aldi and Lidl absorb the rise in food prices and inflation.

This includes the limited range, having the leanest supply chains in retail and most importantly their economies of scale.

“Crucially, in their attempts to position themselves as genuine weekly shopping destinations, both Aldi and Lidl have drastically increased and improved their fresh offer, with sales from fruit and vegetables, meat, poultry and bread now accounting for 50% of sales.

“In this time, they have been the most proactive in driving provenance and localism, with Aldi implementing a 100% British fresh meat policy.

“This heightened relationship with British farmers means they are in a stronger position than their rivals in the immediate term.

“Lidl alone will invest £1.5bn over the next three years in building new stores, refurbishing existing ones and developing new product new lines.

“These investment plans are likely to remain unchanged and, with the value of the pound dropping, the billions of euros set aside are now set to go a lot further.

“As a result, Aldi and Lidl are certainly primed to be the least affected retailers. Indeed they may be the ones to benefit in the short and medium term,” said Kantar.