Business Irish

Wednesday 23 October 2019

Hurley helps turn Aldi into big cheese

German discounter carving out larger slice of market after early battles to get suppliers on board, writes Samantha McCaughren

‘There are towns across Ireland that we want to be in but we are under-represented in urban areas,’ said CEO Giles Hurley
‘There are towns across Ireland that we want to be in but we are under-represented in urban areas,’ said CEO Giles Hurley
Samantha McCaughren

Samantha McCaughren

Giles Hurley was working in the buying department of Aldi's Irish business when he first met the Grubb family in 2005. Producers of the now world-famous Cashel Blue cheese, they were a little wary of the newcomers to the Irish market, with their strange new 'discounter' approach to retail and just a handful of stores in the market.

"I remember we had a business meeting in their kitchen by the Aga, and we had homemade soup," says Hurley.

They were exciting times, he recalls, when the German company was seeking out an Irish supplier base having set up in Ireland in 1999.

Hurley, now chief executive of Aldi UK and Ireland, says that in those days it was a challenge to explain the opportunity that a supplier deal with Aldi would bring to Irish producers.

"We were an unknown quantity. We were a discount retailer and that was really new news in Ireland, and there was a slight sense of trepidation [for suppliers]."

The Grubb family did strike a supply agreement with Aldi, although the cheese was packaged by Aldi as Specially Selected Tipperary Blue Cheese. "Originally there would have been a level of reticence about the supplier putting their brand to it."

In a development which perhaps marks just how far Aldi has come in the intervening years, the product will in the next couple of weeks be rebranded as Aldi's 'Specially Selected Cashel Blue Cheese'. The suppliers are more than happy to see the renowned cheese brand sit on Aldi's packaging.

Having invested €1.2bn in its Irish expansion, Aldi, which claims to offer discounts of up to 40pc on rival retailers' offers, is pushing on with expansion. It has 137 shops now and would happily add another 50 in the next seven or eight years.

Hurley, who has held several senior roles at Aldi, was appointed CEO of the UK and Ireland last March and is very pleased with Ireland.

"Credit to the team in Ireland, our growth is pretty unrivalled. We're got double-digit growth, growing at around 10.5pc in a market that is growing at 3.4pc."

"We've been the fastest-growing retailer in Ireland for almost 10 years and that comes off the back of an extensive store opening plan and investment in refreshing our stores.

"But most of all, that growth is about the compelling offer we have in the market here and let's be clear, it's the compelling price offer that brings people to our stores and the quality that keeps us there."

He is particularly proud of the 'swap and save' ad campaign, which features families identifying savings by switching to Aldi.

"2018 was a stellar year for us, a solid year, and we did have a super Christmas - we added about 350,000 shoppers to our books over Christmas and this year we have seen that momentum continue."

He credits research carried out in Christmas 2017 with the boost in customer numbers last December.

"People were impressed with the size and scale of our Christmas offering, by the quality and the prices, but I would say they were not as aware of it as we'd hoped they would be.

"What we changed in 2018 wasn't necessarily the offer, or the price, or quality - but our communication was much clearer and much sharper."

Aldi now has 11.2pc of the grocery market according to Kantar and this, Hurley says, is proof that there is plenty of demand for its business. Several towns have been earmarked for stores, as well as Dublin locations.

"From Bantry to Ballina to Balbriggan, there are a lot of towns we don't have a presence in," he says.

Hurley knows the Irish market very well. Born to Irish parents in England, he was raised in Surrey before being sent to a primary boarding school in Kells, Co Meath, secondary school in the UK and then back to Ireland for a history degree in Trinity College Dublin.

"Home is Ireland - the majority of my childhood was spent in Ireland and much of my career has been in Ireland," he says, although his accent does not give that away. His wife is from Tralee and his children are Leinster supporters, he adds.

Hurley was always interested in food and worked a kitchen as a commis chef when he was at university.

Rather than go in the direction of fine dining, however, his first proper job was with McDonald's which he joined through a graduate programme, spending 20 months with the fast food chain.

He then joined Aldi, which at that stage had just opened its fifth store here. Hurley became sold on the fledgling Irish operation during the interview process. "There was an ambition, a work ethic and a commitment that was just really impressive," he says.

The company has changed significantly since it opened 20 years ago.

"We have gone through a huge development in this market since we entered in 1999. Over the last 20 years we have seen our product range, our sourcing, our in-store experience improve."

When it arrived in Ireland, it would have carried 700 product lines. Now that has risen to 1,800.

The vast majority of the products on the shelves are Aldi's own-brands with only 5pc of stock belonging to non-Aldi labels.

At the company's head office and warehouse facility in Naas, Co Kildare, the company has a centralised buying function that is focused on buying Irish produce for its business here.

Around 50pc of the company's goods are now Irish, which means Brexit and the implications for food inflation are less of a concern than it otherwise might be. "I reckon our turnover of Irish product is €700m this year," he says.

As with many other large companies, he is reluctant to give specifics on the company's Brexit contingency plans, although there is some stockpiling being carried out in the UK.

In Ireland, the company has consulted with Bord Bia and its supply base to identify any risks and mitigate the impact, he says. "But there is so much that is unknown. We'll know probably in a few months, so let's see."

The company is in the second year of its Grow with Aldi project, which gives dozens of small Irish producers and suppliers a chance be stocked with the company for a period in June and possibly longer.

Among those featuring in the upcoming promotion are Irish honey company Beeactiv and Dublin-based curry pastes company Mama Nagi.

"There is a rich food culture in this company, there is a fantastic supplier base and since we started in 1999 we've built up fantastic relationships."

Hurley makes a point of sampling every product himself before it hits the shelves.

Aldi certainly offers increasingly sophisticated food, with a range of on-trend new vegan and vegetarian lines being introduced at the moment

But how does the company move up the value chain while maintaining is low-cost, low-price model?

"The development we have had over the last 20 years has been very carefully planned. We look after our model and our approach is quite cautious.

"The secret to our formula is being a limited-line retailer so we will never become a mass-market supermarket," he says.

In order to keep up with changing consumer needs and more exotic tastes, Aldi has adjusted its product line. "We've made sure that works within the realms of that model," he says.

The company is investing €60m on 'Project Fresh', a revamp of stores which increases the fresh-food presence in shops and makes it more prominent.

"It was time to upgrade our fixtures and fittings, bring more natural light into the stores, but most importantly to bring improved navigation for customers and more chilled [food] space."

Hurley wants to see growth in both Ireland and the UK.

"We're still under-represented in many areas of the UK and there is still tremendous opportunity to grow the business accordingly," he says.

In Ireland, Hurley sees room for 50 or more Aldi stores in the coming years.

Like rival Lidl, he is frustrated by the planning process which has slowed down the company's expansion rate.

"Since 2014, 95pc of our planning permissions have been objected to by our competitors. That is disappointing." More recently, competitors have begin to object to extensions also. In Wexford, two extensions - Newtown Road and Trinity St - have been objected to.

"While frustrating, overall we're pretty sanguine about the process because, while it might delay us, it won't stop us."

While competitors take on Aldi at the planning stage, they have also reacted by trying to compete on value in some cases.

"The market has always been competitive and dynamic and I don't think that has changed," he says, adding that Aldi's growth level would no doubt force rivals to try and compete with its lower price model.

According to Hurley, Aldi's model is difficult for traditional retailers to replicate given the efficiencies built into the business from the top down. "Competition keeps us on our toes," he says.

"An aggressive competitive market is good - it keeps you lean. And fundamental to our business model and success is that we are an extremely lean organisation."

Curriculum vitae

Name: Giles Hurley

Age: 43

Position: CEO of Aldi UK and Ireland

Lives: Warwick, England but spends a lot of time in Donegal and Kerry

Education: Degree in history, Trinity College, Dublin

Previous experience: Brief stint at McDonalds's. Several senior roles at Aldi

Family: Married to Michelle. Children Freddie (12), Rafe (11), Theodora (6) and Arthur (2)

Pastimes: I am an avid Ireland and Leinster supporter. And child rearing.

Currently reading: Winter in Madrid by CJ Sansom

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