Discount grocers stimulate industry growth

Posted by Daniel Palmer on 23rd July 2008

The latest TNS Worldpanel grocery market share figures, for the 12 weeks ending 13th July 2008 reveal that the success of the UK discounters is continuing.

The discount supermarkets now account for a 5.9% share of Grocery Spending, higher than ever before reported, and they are also the fastest-growing sector of the market. The total grocery market continues to grow strongly (+7% year-on-year), fuelled partly by food price inflation and also by better performance for Supermarkets than other Retail Outlets. The recent success of discount supermarkets was largely attributed to the more trying economic conditions.

While the Discounters’ share in the UK has reached a new record, this level is still modest compared to the share they enjoy in the rest of Europe (11% in France and 38% in Germany according to Europanel). It is, however, higher than in Australia where discount grocery chains have less than 5% market share. Aldi has been embarking on an expansion strategy in Australia and their share could rise above 5% in the next few years as they endeavour to increase their store numbers from 167 to at least 400.

Aldi UK and Lidl, the top UK discount retailers, reaped year-on-year growth of 20% and 14% respectively, reflecting their success in attracting more spend from hard-pressed shoppers, even though the majority of them still do most of their grocery shopping at the major supermarket chains. This compared favourably to the top four retailers, who all recorded growth between 6 and 9 per cent.

Such performance is indicative of the overall buoyancy but intense competition within the Grocery Sector in the current economic climate, according to TNS.