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UK Discounters 2017-2022

UK Discounters 2017-2022

  • August 2017
  • 96 pages
  • ID: 5094630
In this report:
However, over the next five years Poundland's and Poundworld's sales are expected to significantly slow to ##.##% and ##.##% respectively for 2017-2022e, down from ##.##% and ##.##% between 2012-##.
The grocery market has experienced the most turbulence from the discounters, taking ##.##% of the total F&G market in 2017 and sales forecast to rise £##.##bn over 2017-##.

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UK Discounters 2017-2022

Brief

Consumers are shopping at the discounters more than ever before. This has led to the market size growing by 74.20 percent between 2012 and 2017 and will rise 34.40 percent during 2017-2022e. What people buy at the discounters is covering a rising number of items, supporting an £24 lift in spend per head in 2017, so the discounters must keep up with range development. Food & grocery has the more significant penetration of its respective market, with an 11.40 percent share in 2017. Consumers shopping for groceries at the discounters have become the norm, and increase will continue as ranges expand, on-trend offers improve, areas increase, and the shopping experience advances.

Types which are the most successful in terms of sales for the discounters are high frequency purchase categories including food & grocery and health & beauty. These FMCG items have been easier categories for the discounters to penetrate due to their lower selling prices, short replacement cycles and important nature - driving volumes and impulse purchases. Average transaction value at the grocers is low, with average spend more important at Aldi and lowest at Poundland. Aldi has the broadest range of products across F&G, H&B and non-discretionary household goods, allowing customers to do their whole shop - a notable shift over the final two years.

Discounters must not compromise on customer service as while 65.70 percent of discounter shoppers are willing to overlook the instore experience of a discounter; over half of shoppers (55.60 percent) think that discounters should offer good customer service. The perception that discounters offer low quality, small and inconsistent ranges, and a negative shopping experience has been a constant barrier to growth. While not having a store nearby is the principal reason consumers do not shop at discounters this is being addressed through quick store expansion plans. Discounters therefore need to focus on the other main barriers to growth including not being able to do a full shop at the discounters (28.90 percent), and not enjoying the instore experience (23.30 percent).

Aldi has the more considerable discounter market share at 36.10 percent in 2017, largely attributable to its F&G dominance. B&M holds the more significant share of the general merchandisers, with 12.40 percent in 2017; B&M is also the BM discounter which has experienced the biggest market share gains, adding 4.6 ppts to its share between 2012 and 2017.

The market research "UK Discounters 2017-2022", offers exhaustive insight into and analysis of the UK discount retail market, the prevailing trends, hot issues, consumer motivations, strategies for success, and possibilities for future growth. Consumer data is based on our discounter survey using a panel of nationally representative shoppers.

Firms mentioned in this industry report: Aldi, Lidl, B&M Stores, Home Bargains, Poundland, Poundworld, Poundstretcher, The Original Factory Shop, Savers.

Overview

- The discount market is set to grow 36.10 percent between 2017-2022e, growing to £32.5bn from £23.9bn. Strong growth has been driven by the discounters evolving to appeal to the broader consumer, aggressive geographical expansion, diversification of range, and improved in-store experience. Discounters that can appeal to a broad consumer base without alienating its core customer will command the greatest discount market share.

- DIY & Gardening, Homewares, and Health & Beauty are the more important growth categories, all increasing at above 40.0 percent for the five years from 2017. DIY & Gardening will benefit from consumers trading down to do their vitally home maintenance; homewares will benefit from impulse purchasing and gifting as well as consumers seeking to buy small luxuries where they can; and Health & Beauty will grow due to the discounters' ability to provide branded products at a lower price. Although, the latter will be challenged in the outlook with inflation eroding margins.

- Food & Grocery has been the most successful discount category, commanding 70.0 percent of the global discount retail market. Strong growth has been driven by the frequency of purchase of F&G items and the lack of branded items has meant that the discount F&G retailers have manged to remove the perception and trust issue that surrounds own-label items.

- Clothing & Footwear unveils a additional growth opportunity for the discounters. At the moment, the discounters only command 0.60 percent of the clothing & footwear market, and with the predicted decrease in consumer spending it is likely that general retail clothing sales will decrease, thus leaving consumers looking for somewhere to obtain cheaper clothing. The discounters could become that destination if they develop on-trend ranges which appeal to consumer needs.

Great reasons to purchase

- Utilise our five year forecasts to 2022 for the discounter retail channel, and sector penetration to help form an effective growth strategy.

- Understand why the discount market has been so disruptive for the retail sector.

- Consider our analysis of hot issues, strategies for success, and alternatives for increase to comprehend the future of the market and potential for discount retail.

- Comprehend the discounter penetration for each category, and which are under/outperforming.

- Review how the discount market is outperforming the retail market, the reasons for this, and whether increase is sustainable.

- Recognise what consumers want from the retail sector, both discounter-specifically, and in the general retail perspective.

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