Discount supermarket targets middle classes

The German-owned "no frills" grocer - which has emerged as one of the biggest winners of the credit crunch - wants to open 200 stores in the capital, including the most upmarket enclaves.

Aldi's director for London and the South-East, Graham Hetherington, today said there were no "no-go" areas in the capital.

"We reckon London is a gold mine for us. London is undersupplied with supermarkets compared with the rest of the country because of the difficulty of getting sites. But it is very straightforward for us to open our normal format, which are about a quarter of the size of a medium-sized Tesco."

Aldi currently has only 20 stores in London, in areas including Tottenham and Dagenham. It plans to open three to five new stores a year over the next few years and then accelerate expansion.

It has already opened in leafier neighbourhoods such as Upminster and Bexley Heath, but now says even wealthier areas are ready to embrace Aldi.

Mr Hetherington added: "We are looking at opportunities right in the heart of London. We may not go right into the middle of the city straight away, but I've been looking at sites in the London Bridge area." Aldi now claims that half its shoppers are from the wealthier ABC1 social groups and its biggest selling frozen line is the gastropub staple, lamb shank. Mr Hetherington said: "We've had shoppers from Waitrose and even Marks & Spencer come to us.

"Our North Finchley store was an M&S Simply Food. We've done extremely well there on a site they were unable to make work. We also plan to extend all our stores in London so we can present them in a way to attract Tesco and Sainsbury's shoppers even more." Aldi's sales have rocketed since the start of the credit crunch and are growing at around 30 per cent a year. Its fruit and vegetable sales are up by 80 per cent. Aldi charges about 25 per cent less than the big chains but prides itself on the high, and sometimes award-winning, quality of its limited number of lines.

Rival discount retailer Lidl has raised its presence in London, including a convenience store at Edmonton Green but made a less overt appeal to wealthier shoppers.

Aldi plans to spend £1billion on expansion in Britain in the next five years and targets a 10 to 15 per cent market share within 20 years.

The aggressive push has alarmed the "big four" supermarkets. Tesco has constructed a mock German discount store in a warehouse near its Hertfordshire headquarters to work out how to counter the trend.

The move to discount grocers - which some commentators have called the biggest shift in UK food retailing for 20 years - mirrors the Primark effect in fashion and the success of Ryanair in aviation.