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UK Discounters 2017-2022

UK Discounters 2017-2022

Summary

Consumers are shopping at the discounters more than ever before. This has led to the market size increasing by 74.2% between 2012 and 2017 and will rise 34.4% during 2017-2022e. What people buy at the discounters is covering an increasing 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 highest penetration of its respective market, with an 11.4% share in 2017. Consumers shopping for groceries at the discounters have become the norm, and growth will continue as ranges expand, on-trend offers improve, locations increase, and the shopping experience advances.

Categories which are the most successful in terms of sales for the discounters are high frequency purchase categories such as 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 essential nature - driving volumes and impulse purchases. Average transaction value at the grocers is low, with average spend highest 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 last two years.

Discounters must not compromise on customer service as while 65.7% of discounter shoppers are willing to overlook the instore experience of a discounter; over half of shoppers (55.6%) 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 consistent barrier to growth. While not having a store nearby is the main reason consumers do not shop at discounters this is being addressed through rapid store expansion plans. Discounters therefore need to focus on the other key barriers to growth such as not being able to do a full shop at the discounters (28.9%), and not enjoying the instore experience (23.3%).

Aldi has the highest discounter market share at 36.1% in 2017, largely attributable to its F&G dominance. B&M holds the highest share of the general merchandisers, with 12.4% in 2017; B&M is also the BM discounter which has experienced the largest market share gains, adding 4.6 ppts to its share between 2012 and 2017.

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

Specifically, this report -

  • Identifying the factors that are affecting the discounters.
  • Exploring what people buy and spend at discount stores.
  • Looking at space, sales density and stores within the discount retailers.
  • Understanding how consumers shop in discount stores.
Companies mentioned in this report: Aldi, Lidl, B&M Stores, Home Bargains, Poundland, Poundworld, Poundstretcher, The Original Factory Shop, Savers.

Scope
  • The discount market is set to grow 36.1% between 2017-2022e, rising 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 highest growth categories, all growing at above 40% for the five years from 2017. DIY & Gardening will benefit from consumers trading down to do their essential 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 future with inflation eroding margins.
  • Food & Grocery has been the most successful discount category, commanding 70% of the total 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 presents a new growth opportunity for the discounters. At the moment, the discounters only command 0.6% 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.
Reasons to buy
  • 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 opportunities for growth to understand the future of the market and potential for discount retail.
  • Understand 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 growth is sustainable.
  • Recognise what consumers want from the retail sector, both discounter-specifically, and in the general retail perspective.


  • The hot issues
    • What is included and methodology
    • Market drivers and inhibitors
    • Main issues in the discounters channel
    • Strategies for success in the discounters channel
    • Opportunities in the discounters channel
    • What does this mean for non- discounters?
    • What does this mean for the other retailers?
  • What people buy
    • Headlines
    • The channel at a glance
      • Table The channel at a glance
    • Overall channel size
    • Overall market growth
    • Discounter vs retail market value
    • Food vs non-food performance
    • Who shops where and for what?
    • The channel at a glance
    • Food & Grocery
    • Overall channel size
    • Health & Beauty
    • Overall channel size
    • Homewares
    • Overall channel size
    • DIY & Gardening
    • Overall channel size
    • Clothing & Footwear
    • Overall channel size
    • Spend per head
    • Product innovation examples
    • Promotions and offers
  • Where people shop
    • Headlines
    • Market shares
      • Table Five year discounter share changes
      • Table Discounter market share forecasts for the next five years
      • Table Discounter comparative metrics
    • Space
      • Table Discounters total selling space 2012-2017e
      • Table Discounter total store numbers 2012-2017e
    • Market shares
    • Retailer profiles
    • Space
    • Best in class discount food & grocery store
  • How people shop
    • Highlights
    • Who shops and where they are located
    • Shopper frequency
    • Frequent discount shoppers
    • Shopper frequency by retailer
    • Sectors shopped
    • Frequency of purchases
    • Store locations
    • Average spend
    • Spending habits
  • Why people shop
    • Headlines
    • Non-discounter shoppers
    • Net Agreement
    • Online
    • Store drivers
  • Methodology
    • What is included and methodology
    • What is included

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