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Growth of Hard Discounters - Ireland

Published by: Mintel International Group Ltd.

Published: Jun. 1, 2009 - 113 Pages


Table of Contents


Issues in the Market

Key themes of the report

Definition

Abbreviations



Market in Brief

Discounters tighten their grip on Ireland’s food retailing sector

Times of hardship ultimately mean changing shopping patterns

The era of the bargain hunter

Easing the threat of hard discounters



Internal Market Environment

Key points

Rise to fame

Figure 1: The rise to fame of the hard discounters, 2009

The birth of the bargain hunter

High degree of price-consciousness in RoI

Figure 2: Consumer agreement to range of shopping statements, RoI and NI, 2003-08

The strategic approach

Figure 3: Consumer response to statement ‘I decide what I want before doing the weekly shop’, by gender, age and social grade, RoI and NI, 2008

Coming up trumps

The knock-on effect from price-comparison statistics

Importance of fresh local produce

Figure 4: Consumer response with statements relating to shopping, RoI and NI, 2003-08

Meeting consumers’ health and nutrition expectations

Figure 5: NPD food & drink launches, UK and Ireland, 2003-09

Benefits of leading a healthier lifestyle

Fresh food revolution

Figure 6: Consumer response with statements relating to their lifestyle, RoI and NI, 2003-08

Own-label substitutes gain ground

Figure 7: Consumer agreement to a range of food statements, RoI and NI, 2003-08



Broader Market Environment

Key points

Ireland’s recession plays to the advantage of discounters

Figure 8: Economic outlook for NI and RoI, 2008-10

How confident are we?

Possible market opportunity by helping consumers cut back

Figure 9: Consumer responses to statement ‘When feeling the pinch, which of these are you most likely to do when trying to cut back your personal spending?’, NI and RoI*, January 2008

Rise of the ‘euro tourist’

Easing the threat of ‘euro tourists’

Adapting to an ageing market

Figure 10: RoI and NI projected population, by age group, 2000-20

Technology developments may be vital for growth of hard discounters

Figure 11: Number of respondents with a broadband internet connection at home, NI and RoI, 2004-08



Innovation in Value Brands

Key points

Sizeable rise in the number of value ranges launched in 2008

Figure 12: Number of economy and premium food and drink launches in the meals and meal centres and bakery categories, UK/RoI, 2003-09

The recession boosts demand for condiments, bakery and convenience items

Findings documented in the Bottled water hit by the crunch article

Tesco leads the way in value NPD launches

Figure 13: Number of economy food and drink launches, by company, UK and RoI, 2003-09



Growth of the Hard Discounters

Key points

Ireland’s changing food retailing environment

Hard discounters tighten their grip on RoI grocery market

Figure 14: Market share of RoI grocery market, by retailer, 2006 and 2008

Aldi and Lidl increase their market presence

Tesco dominates the UK food retailing sector

Figure 15: Market share of the UK grocery market, by retailer, 2006-08

Comparison to NI grocery market

Profile of Ireland’s hard discounters

Aldi

Figure 16: Aldi business model, 2009

Figure 17: Aldi product range, 2009

Lidl

Figure 18: Lidl business model, 2009



Competitor Reaction

Key points

More competitive retail arena

Figure 19: Advertising expenditure, by retailer, RoI, 2004 and 2008

Asda

Impact of the credit crunch

How is Asda targeting the discount shopper?

Pricing and promotion

Asda lower price promise goes live

Back with the old - the return of the pocket tap

Expansion of distribution

Communications - message to consumers

Budget ranges

Figure 20: Asda own-label range, 2009

Dunnes Stores

Impact of the credit crunch

How is Dunnes targeting the discount shopper?

Communications - message to consumers

Budget ranges

Marks & Spencer (RoI and NI)

Impact of the credit crunch

How is M&S targeting the discount shopper?

Jumping on the promotions bandwagon

Latest seasonal features

Move to incorporate branded items

Communications - message to consumers

Creating a night-out ambience at home

Budget ranges

Food baskets

Sainsbury’s (NI only)

Impact of the credit crunch

How is Sainsbury’s targeting the discount shopper?

Basic food and drink lines boost sales at Sainsbury’s checkouts

Targeting the stay-at-home consumer

Communications - message to consumers

Encouraging consumers to become smarter shoppers

Budget ranges

Figure 21: Sainsbury’s economy range, 2009

SuperValu

Impact of credit crunch

How is SuperValu targeting the discount shopper?

The price promise

Meal for the family

Aligning closely with suppliers

Communications - message to consumers

Striving to stand out

SuperValu real rewards

Budget ranges

Tesco Ireland

Impact of the credit crunch

The one to beat

Job generation despite the recession

How is Tesco Ireland targeting the discount shopper?

Every little helps

Targeting consumers at their richest?

Clubcard and online shopping service helps maintain customer footfall

Communications - message to consumers

Real baskets

Budget ranges

Figure 22: Tesco value ranges, 2009



Shopping Priorities

Key points

Competing with other grocers’ offerings

Figure 23: Deciding factors when shopping for food, drink and household products, by most important factor, RoI and NI, 2003 and 2008

Making the shopping trip more convenient

Bringing in the shoppers

Figure 24: Type of shop consumers prefer to shop when doing the regular main shopping for food, drink and household products, RoI and NI, 2003-08

Top-up shopping opportunities

Figure 25: Type of shop consumers prefer to shop in when topping up their food, drink and household products, RoI and NI, 2003-08



Where do Consumers Shop?

Key points

An increasingly fickle shopper?

Figure 26: Food and drink retailers regularly shopped in, RoI and NI, January 2009

One in three Irish consumers regularly shop in convenience stores

Targeting the Irish consumer

Recessional guilt

Does loyalty come at a price?

The consequences for the market



Important Factors When Shopping

Key points

Hard discounters to capitalise on changing retail environment

The rise of the bargain hunter

Figure 27: Most important factors when grocery shopping, RoI and NI, January 2009

Premium aspects are important to a third of Irish consumers

Varied shopping basket in RoI

It’s not all about price - today’s discounter is multidimensional

Figure 28: Important factors when grocery shopping, according to Aldi/Lidl shoppers, RoI, January 2009

Figure 29: Important factors when grocery shopping, according to Aldi/Lidl shoppers, NI, January 2009



APPENDIX

GNPD appendix

Figure 30: Number of economy food and drink launches, by category, UK and RoI, 2003-09

TGI appendix

Figure 31: Agreement with the statement ‘I buy goods produced by my own country whenever I can’, by demographic breakdown, NI and RoI, 2008

Figure 32: Agreement with the statement- ‘I tend to spend money without thinking’, by demographic breakdown, NI and RoI, 2008

Figure 33: Agreement with the statement- ‘I like to try out new food products’, by demographic breakdown, NI and RoI, 2008

Figure 34: Agreement with the statement- ‘I buy free-range products whenever I can’, by demographic breakdown, NI and RoI, 2008

Figure 35: Agreement with the statement- ‘I am eating more healthy food than I have in the past’, by demographic breakdown, NI and RoI, 2008

Figure 36: Agreement with the statement- ‘I always use money-off coupons and vouchers’, by demographic breakdown, NI and RoI, 2008

Figure 37: Agreement with the statement- ‘It's worth paying more for organic food’, by demographic breakdown, NI and RoI, 2008

Figure 38: Agreement with the statement- ‘I always look out for special offers’, by demographic breakdown, NI and RoI, 2008

Figure 39: Agreement with statement- ‘I buy fair trade products when available’, by demographic breakdown, NI and RoI, 2008

Figure 40: Agreement with the statement- ‘I pay attention to where the products I purchase are made/grown’, by demographic breakdown, NI and RoI, 2008

Figure 41: Agreement with the statement- ‘I am prepared to pay more for foods that don't contain artificial additives’, by demographic breakdown, NI and RoI, 2008

Figure 42: Agreement with the statement- ‘I always think of the calories in what I eat’, by demographic breakdown, NI and RoI, 2008

Figure 43: Agreement with the statement- ‘I try to include plenty of fibre in my diet these days’, by demographic breakdown, NI and RoI, 2008

Figure 44: Agreement with the statement- ‘I should do more about my health’, by demographic breakdown, NI and RoI, 2008

Figure 45: Agreement with the statement- ‘I consider my diet to be very healthy’, by demographic breakdown, NI and RoI, 2008

Figure 46: Agreement with the statement- ‘I always check the nutritional content of food’, by demographic breakdown, NI and RoI, 2008

Figure 47: Agreement with the statement- ‘I always look for the light/diet versions of food & drink’, by demographic breakdown, NI and RoI, 2008

Millward Brown appendix

Figure 48: Food and drink retailers regularly shopped in, by demographics, NI, January 2009

Figure 49: Food and drink retailers regularly shopped in, by demographics, RoI, January 2009

Figure 50: Most important factors when shopping for food and drink, by demographics, NI, January 2009

Figure 51: Most important factors when shopping for food and drink, by demographics, RoI, January 2009

Figure 52: Most important factors when shopping for food and drink, by demographics, RoI, January 2009

Figure 53: Consumers’ choice of retailers, by ethical preferences, RoI, January 2009

Figure 54: Consumers’ choice of retailers, by ethical preferences, NI, January 2009

Consumer typologies appendix

Figure 55: Consumer response with statements on most concerning factors regarding current economic situation, retailer regularly shopped in and most important factors when shopping, by cluster groups, NI, January 2009

Figure 56: Demographic profile of NI cluster groups, January 2009

Figure 57: Consumer response with statements on most concerning factors regarding current economic situation, retailer regularly shopped in and most important factors when shopping, by cluster groups, RoI, January 2009

Figure 58: Demographic profile of RoI cluster groups, January 2009



APPENDIX: RESEARCH METHODOLOGY


Abstract

Hard discounters have limited communications in-store, online or via telephone. Unlike other retailers, Aldi and Lidl shoppers currently have to email both retailers before receiving a response; a method which may infuriate impatient consumers.

While discounters’ communications strategy may result in short-term gains (lower costs) this approach may risk dissatisfaction in the longer term. It may send the message that Aldi and Lidl do not care about their customer opinions.



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