Lidl ramps up London expansion with £500m investment

German discounter Lidl has unveiled a £500m investment plan for London, as it looks to ramp up its foothold in the capital and heap further pressure on larger rivals.

The chain said it would open 40 stores in the capital over the next five years, including its first central shop on Tottenham Court Road. The expansion will bring the total number of stores within the M25 up to 128 from 88 at present and will create 1,500 new jobs.

Rents are generally much higher in London than in other parts of the country, which is seen as a barrier for no-frills supermarkets. But Christian Härtnagel, chief executive of Lidl GB, said: “London is at the heart of our growth plans across Great Britain, and we are proud to be in a position where we’re continuing to create new jobs. Our investment reflects the scale of opportunity we have to bring our quality produce to even more of the capital’s communities.”

Discounters Lidl and Aldi are much smaller than the UK’s biggest supermarket brands, both in terms of sales and market share. But they have expanded rapidly over the last decade and have had a dramatic impact on the grocery market, as consumers warm to their limited but ultra cheap ranges.

The so-called big four – Asda, J Sainsbury’s, Tesco and Wm Morrison – have all felt the pinch, often having to cut prices in response.

According to the latest data from Kantar Worldpanel, the big four all lost market share in the 12 weeks to 19 May. But Aldi and Lidl continued to report strong growth and a record combined market share of 13.8%.

Lidl, which first opened in the UK in 1994, currently has around 760 British stores. The latest investment also cover Lidl’s new UK head office, which is being built in Tolworth, south west London, and will house 800 staff. Lidl is part of Schwarz Gruppe, a private family-owned German company.