The Continuous Rise of Discount Retailers
05 Jun 2014|Added Value
The economy is slowly on the rise but our shopping habits, which we learnt during the recession, show no signs of shifting. Discount retailers, such as Iceland, Poundland, Aldi, Lidl and Wilkinson’s have sawn through our high-streets and are reaping record high profits.
With Aldi now officially becoming the UK’s fastest growing food retailer, having boosted its sales by over 35% since the start of the year and Tesco announcing their sales are down for yet another year – are the main supermarkets – Sainsbury’s, Tesco, Asda, Waitrose, Morrison’s and so on – in trouble, we asked the team… Should the main-line supermarkets be worried about the continuous rise of discount retailers?
“Yes, they should be worried. The economic slow-down made many people, also amongst the middle and upper classes, notice and try out the discounters. They realised that on many products the discounters are equally as good as the main supermarkets, but with a much lower price tag.
Recently the discounters have gained even more traction by stepping up and creating premium ranges, adding fresh bread and organic vegetables to their offer – and with the population still purchasing with care, the discounters are winning hands down.
I’m convinced discounters will further grow in share, and might even gain the same position in the UK as they have in Germany, for example, where buying food basics at discounters and only topping up at the main supermarkets is a widespread shopping habit, and one shared by above average income households.
It definitely feels going to a discounter is a lot less a taboo in the UK now than it was before the crisis which is certainly something to worry about for the big established supermarkets.”
Reinhard Kreth, Added Value UK
“I think some of the supermarkets, Tesco, Asda… whose sole focus is on price should be concerned. But others like Sainsbury’s and Waitrose can sleep easy; they have a much clearer differentiation in the marketplace and a strong value proposition. Their brands have been built and evolved with a strong sense of their corporate values, and a boldness to tap into cultural trends when the others around them aren’t.
These two retailers understand that people care about the quality, values and provenance of their food and are looking for inspiration to fuel a life where food and cooking play an important part; even if people are on a budget they can still eat well.
I think we also need to factor in convenience; could discount retailers such as Aldi and Lidl keep the same price point if they were in more desirable and convenient locations or even offered on-line shopping? The majority will still fill up that ever so slightly more expensive basket from the main line supermarket chains if it’s more convenient and accessible.”
Emily Smith, Added Value UK
Picture source: Thinkstock