Lidl ramps up supermarket battle with 40 new stores

Discount supermarket chain Lidl plans to open 40 new stores in the south-east of England.

The £500m investment will take place over five years and will include a new UK head office in south-west London.

The move will create 1,500 new jobs, a boost for the traditional retail sector which has seen high-profile store closures in recent years.

New shop locations will include Alperton, East Acton, Hackbridge and Watford. as well as central London.

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Lidl opened its first shops in the UK in 1994 and now employs more than 22,500 people in 760 stores.

It has a 5.8% share of UK grocery spending, up from 5.4% a year ago, according to research firm Kantar. Rival discounter Aldi has an 8% share.

Supermarket fight back

Sainsbury's, Morrisons, Tesco and Asda are all seeing their share of the market drop, although between them they still account for more than two thirds of spending on grocery shopping.

Aldi and Lidl's approach, with fewer product lines and lower prices, has forced competitors to cut their own prices and costs.

Sainsbury's and Asda attempted a merger, partly in response to the rising competition from discount supermarkets.

However, their deal was blocked earlier this year by the Competition and Markets Authority.

Last year, Tesco began a fight back with its own discount brand, Jack's, although it has opened only nine stores to date.

And in January there was a particularly aggressive round of price cuts from the large supermarkets as they tried to lure customers back to their stores.