Mr Trevor Coates didn't exactly receive one hundred thousand Irish welcomes when he brought the German discount chain Aldi to the Republic last November. Public disputes with the Irish Farmers Association (IFA) and indigenous retailers grabbed most of the headlines, but the managing director of Aldi's British and Irish operations hasn't been scared off by his baptism of fire.

"In any new market you go into you are going to challenge the establishment," says Mr Coates. "Established and very strong retail groups are anxious to protect their position."

It is Aldi's cost-cutting format, which provides discounts of up to 30 per cent, which tends to ruffle the feathers of competing retailers, according to Mr Coates.

The group has established something of a track record of becoming involved in price wars and disputes but Mr Coates' retail experience has prepared him for anything retailers here could throw at him.

He entered retailing straight from school and has worked for more than 30 years with firms as diverse as British Home Stores, British American Tobacco and Asda. He worked for a time in the Far East facilitating the entry of a major Hong Kong retail chain into the Chinese, Taiwanese and Thai marketplaces. But it has been his role establishing Aldi in the UK in 1989 which has been his most challenging to date.

"A lot of pressure was brought to bear on some of our suppliers in the UK to stop supplying Aldi, and when that happened I had a lot of products withdrawn from sale," says Mr Coates. "Fortunately, with our connections and buying power in Europe, we managed to overcome that."

Indigenous retailers in the Republic have adopted similar tactics by "leaning on" Aldi suppliers, according to Mr Coates. Last month, in a polished performance to the Oireachtas Joint Committee on Enterprise and Small Business, he blamed the relatively low uptake rate by Aldi of Irish suppliers on action by established retailers.

"There would have been discussions with some suppliers that would suggest they have been under pressure," says Mr Coates.

He attributes this reaction to the small size of the market in the Republic and the domination by a handful of retailers. He is hopeful that more suppliers will respond to the group's invitations and says he is keen to source more Irish produce.

However this pressure hasn't reached the same high levels that it did in the UK, he adds. "It hasn't happened to the same degree in Ireland because we already have a substantial sourcing base here because we have been sourcing from Irish groups operating and manufacturing here and operating the UK."

Despite the existing supply base presence in the Republic prior to the opening of its stores in Cork and Dublin, Aldi couldn't avert the much publicised standoff with the Irish Farmers Association over the issue of milk pricing and sourcing.

Comical scenes of farmers parading a dairy cow decked out in Cork colours outside the Aldi store in Ballincollig last year raised few smiles among Aldi executives. However, Mr Coates doesn't feel it has damaged Aldi's reputation. After all, how many consumers are likely to object to a saving of 25p on a two-litre carton of milk?

"We thought we had gone about sourcing milk in the correct fashion by approaching people in Ireland. In some instances we didn't get a response at all and in some instances the prices we were getting quoted we didn't think competitive," he says.

Mr Coates won't be drawn into labelling milk producers in the Republic a cartel, but he is adamant that Aldi should represent consumers rather then suppliers. "We don't allow suppliers to dictate to us at what price we should sell at because if they do that they are controlling the market," he says. "Our commitment is to our customers."

Cost-cutting is central to the Aldi format. The group has blossomed in the US, where it now has approximately 560 stores, by luring shoppers with large savings on own-label goods. Mr Coates admits the discount format is less established in Britain where there is an element of "shopping snobbery" and the group has not expanded at the same pace as in the US. The tastes of the Irish shopper are still unclear, he says.

"Irish consumers have their own style and I don't think you can compare them to one (US) or the other (UK). They are unique and we have to make sure we have the flexibility to cope with those demands," he says.

The Aldi format, however, is not noted for its flexibility. Uniformity and standardisation are part and parcel of a philosophy which sets out strict guidelines on everything from store size, which should be 12,000 square feet, product selection, which is almost entirely own brand, and a lean management structure, which produces cost savings.

"Because our format is unique we are intent, and it is proven by our international growth, in bringing the consumer the best quality in line with the brands or the best own-label prices 30-40 per cent cheaper," says Mr Coates.

By limiting its range of products and buying in bulk at low costs from suppliers, Aldi has managed to undercut the prices of most competing retailers in the Republic already. Its decision to establish a temporary central distribution centre in Sandyford, Co Dublin, of some 75,000 sq ft should enable the company to expand further in the Republic and cut its distribution costs in the short term.

"Our long-term plan would be to build a development of the size which would be a purpose-built warehouse location of about 300-350,000 sq ft with a regional office and regional director," said Mr Coates. A facility of this size should be established within five years and would service about 60 stores in the Republic and Northern Ireland, he says. Expansion of the store network has been slowed by planning delays and the high cost of land in the Republic, says Mr Coates. The latter is also playing havoc with the standard Aldi format. The Dublin store is the only one in Britain or Ireland which does not have a car-park. The group's third store in the Republic, which opened last week in Letterkenny, Co Donegal, is the first to be purpose built to the Aldi format.

"Our long-term strategy is to buy freehold land and to build our own particular design of store on those premises rather than just convert something," says Mr Coates. "But we have to maintain a very tight overhead and a fundamental part of that is the prices we pay for land."

"We are on site in Tullamore and Carlow, we've got an appeal lodged in Dundalk and Galway is being prepared at the moment, that's a lease and then there's Castlebar. That's a portfolio of sites to cover Ireland and then we'll come back and fill in the gaps," says Mr Coates.

Aldi's willingness to adapt to the realities of the Irish marketplace and the fact that the planning laws suit its relatively small size of store are both key factors Mr Coates considers important to the group's further expansion here. But does a question mark remain over Aldi's ability to meet the challenge from huge transnational retailers that can gain economies of scale?

Mr Coates says he is aware of the increasing trend towards consolidation in global retailing and rumours of Wal-Mart's interest in the Republic, but maintains that Aldi has no immediate plans to expand through acquisition.

"Yes we could move more quickly if we had the management structures to do that I suppose, but we're talking about substantial capital investment," he says.

"We prefer our approach - long-term investment and growth in the marketplace," he says. "Wal-Mart or any other competitor's activity doesn't really influence ours. We have our own focus, our own agenda and we prefer to get on with that."