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Discounters' position evolving as channel grows

Aldi and Lidl now perceived as ‘supermarkets’ rather than 'discounters' by most shoppers with consumers increasingly using them for main shop

Discounters' position evolving as channel grows

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UK shoppers’ perceptions of discount retailers are coming in line with their opinions on other supermarkets as the discount channel grows and Aldi and Lidl look to expand further.

To coincide with the launch of Tesco’s new discount brand and stores, Jack’s, IGD compiled a list of eleven interesting stats about the UK’s discount channel. They are as follows: 

1. Shoppers perceptions of Aldi and Lidl are changing as the food discount channel evolves, with shoppers perceiving Aldi and Lidl more as supermarkets than as discounters. Over half (53 per cent) of British grocery shoppers refer to Aldi as a supermarket and 40 per cent refer to it as a discounter. For Lidl there’s a 50 per cent – 40 per cent split.

2. Aldi is now a destination for the ‘main shop’, with 47 per cent of the retailer’s shoppers doing a main shop on their last trip. This is in line with non-discount supermarkets and has increased from 41 per cent over the same period a year ago.

3. Some 21 per cent of food discount shoppers claim to have been looking to buy an evening meal on their last shopping trip. This is the same as non-discount supermarket shoppers, with 21 per cent also on an evening meal mission. Improved merchandising and increased ranging of evening meal solutions in discount stores are likely to have driven this.

4. IGD forecasts that the UK discount channel will account for £1 in every £7 spent on groceries by 2023.

5. The discount channel has the highest cash growth sales forecast over the next five years, up 37 per cent from £23.1 billion in 2018 to £31.5bn in 2023.

6. IGD forecasts discount stores per capita in the UK will double from 2010 to 2023, to reach 5,118 stores.

7. The discount channel is well embedded in multichannel shopping behaviour, with 84 per cent of British grocery shoppers visiting at least one discounter a month.

8. Over half (53 per cent) of London grocery shoppers claim they would use Aldi and Lidl more if there was a store nearer to them.

9. Some 43 per cent of London shoppers would use variety discount stores, such as Poundland and B&M Bargains, more to buy groceries if there was one nearer to them.

10. The top five reasons why British grocery shoppers visit food discounters are:

1) Helps save money (79 per cent) 

2) Good quality products (39 per cent)

3) More convenient (37 per cent)

4) Good choice of products (36 per cent)

5) Quicker and easier (26 per cent)

11.The top five reasons British grocery shoppers visit non-discount supermarkets are:

1) More convenient (66 per cent)

2) Good choice of products (48 per cent)

3)Quicker and easier (43 per cent)

4) Good quality products (34 per cent)

5) Helps me to save money (25 per cent)

Commenting on further growth opportunities in the discount channel, IGD director of insight Simon Wainwright said: “Ambitious store openings have supported rapid discount growth in the UK to date, however the next period of growth may be more complex.”

Wainright cited two main reasons: firstly, that competition for the best stores locations is intense, and secondly that cities and towns will see multiple stores from the same discounter, which risks self-cannibalisation of sales. 

The IGD director predicted that discounters will work closer with developers to unlock contested sites, adding that maintaining sales growth will be a challenge, but he foresees “sizeable opportunities” for growth in London and the south east.  

“The discount channel will continue to offer suppliers undeniable growth opportunities, so continuing consolidation and collaboration will offer greater scale, while new store openings will widen their reach,” he said.

“As competition within discount intensifies, differentiation will become more important for individual retailers to stand out. Exclusive products will help discounters to stand out from one another and make it harder for shoppers to compare prices across channels. 

“A stronger and more impactful discount channel will depend on consolidation, centralisation and collaboration.”

With Tesco announcing that eight out of 10 products ranged at Jack's will be grown, reared or made in Britain, IGD also carried out research into the importance of provenance to British shoppers when buying food and groceries. The research charity found that:

1.    ‘British’ or ‘locally produced’ is one of the top attributes that shoppers use to help define a product as being higher quality. Some 27 per cent claim these labels help them identify a product as being higher quality.

2.    Nearly half (47 per cent) of UK grocery shoppers agree that it is more important to use British suppliers, even if that means food and groceries are more expensive for shoppers 

3.    Some 78 per cent of shoppers agree that the UK needs to be more self-sufficient in food and not rely on imports as much.

4.    Over two thirds (68 per cent) of British grocery shoppers agree that supermarkets should focus more on selling food produced by British farmers.

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