Previous plans were thwarted by bigger rivals

The German-owned chain is the ninth-largest retailer in Europe by sales volume but its 279 sites have just under 1% of UK market share.

It offers less choice than rivals but claims its prices are about 30% lower.

It plans to open about 200 more stores in the UK over the next seven years and to relocate some of its current stores.

Going upmarket

The new locations should reflect its new, more upmarket clientele.

Future new store locations will reflect the "new customer profile", Aldi says.

Aldi follows a business model of selling almost exclusively own-brand products in 'no frills' stores.

It says it can heavily discount both its food and non-food lines because of operational efficiencies.

The key thing for them to overcome is the public perception Gavin Rothwell, Verdict

Shoppers have to pack and pay for their bags, cannot use credit cards or cheques, trolleys have a �1 deposit to remove the cost of hiring collectors and all food is pre-packed.

But the company, which has more than 5,000 stores across Europe, the US and Australia, wants to distance itself from other discount chains, a sector which has come under pressure from price-cutting by the big supermarket chains.

Tough battle

Aldi says it has increased its ranges in the last four years and new products such as crayfish tails and Italian ham have helped it attract more affluent customers.

UK SUPERMARKET SHARE Tesco 28.3% Asda 16.7% Sainsbury's 15.5% Morrisons & Safeway 13.2% Somerfield 5.7% Co-op 5.1% Waitrose 3.6% Iceland 2% Source: TNS

"They've been looking to reposition themselves by focusing more strongly on quality but the key thing for them to overcome is the public perception as they're seen as somewhat downmarket," said Gavin Rothwell, senior retail analyst with Verdict.

Its existing supermarket rivals, however, are unlikely to give Aldi a free ride, said Mr Rothwell.

"Previous expansion plans have been thwarted by price discounts from Tesco and Asda and these moves are likely to be met with the same response."

Aldi also plans to create more distribution centres in the UK. Its sixth site opened in Bathgate, Scotland, this month.