DISCOUNT retailer Aldi is planning to open 200 stores as part of a £500m expansion drive over the next seven years.

The German chain, which is the ninth-largest retailer in Europe by sales volumes, has 278 outlets in the UK but believes it can eventually build a network of 1,500 shops.

Despite estimated group sales of £16bn last year, Aldi has failed to make an impact during 15 years in the UK. It is believed to have less than one per cent of the market with sales of about £1.1bn last year.

As part of its push to capture more of the £115bn-a-year UK grocery market, Aldi recently opened a distribution centre in Scotland.

The company has only 19 outlets north of the border, but is planning to expand there as it bids to stretch its UK estate to more than 450 shops within five years.

Aldi also believes that a third of its UK stores are in the wrong location and should be moved, in some circumstances to more affluent locations.

The Aldi business model offers fewer product lines than other retailers, but sells them for prices estimated to be 30 per cent less than its rivals.

Markus Beher, regional managing director for Aldi Scotland, told the Financial Times: "We have brand quality at own-label price. Probably not enough people know about that yet."

Aldi sells own-brand products in its no-frills stores, and says it heavily discounts products because of operational efficiencies.

Shoppers have to pack and pay for their bags, cannot use credit cards or cheques and all food is pre-packed.