Eastern Europe to continue embracing discount supermarkets as range changes drive growth

Posted by Daniel Palmer on 3rd September 2008

Rising demand in Eastern Europe will fuel growth in the discount sector over the next four years, as shoppers respond to less buoyant economic conditions and retailers better tailor their offer, according to international grocery experts IGD.
Rapid growth in Eastern Europe, particularly Russia, will see the discounters’ share of the total European grocery market grow from 17.6% to 19.5% by 2012, IGD’s Evolution of Discount Retailing report forecasts. A figure well beyond that of the discount grocery market share in Australia, but below that of world leaders Germany (38%, according to Europanel).
“Looking ahead, the polarisation of wealth in Russia lends itself to discounter development, so we forecast that the Russian market will be second only to Germany’s traditionally large market within four years,” says Joanne Denney-Finch, chief executive of IGD. “But there are opportunities across Europe, as more mature markets such as Germany and Belgium continue to deliver growth and the Polish, Czech and Hungarian markets grow rapidly.”
The report says manufacturers who are not involved in the sector should reconsider their approach. “Just as consumers are looking afresh at discounters, so should manufacturers,” Ms Denney-Finch advised. “As more shoppers head through discounters’ doors, and the offer is broadened, the evolving market offers new opportunities for some premium and branded manufacturers which have previously disregarded the discount channel.”

IGD believes that price is not the only reason for the growth in the sector, with greater consumer understanding leading to range changes. “The European discount market will grow steadily and will reap the benefits of a more price conscious environment,” Ms Denney-Finch adds. “Growth will not only be fuelled by worries about the economy; discounters are giving consumers more of what they want in terms of healthier and more upmarket ranges.”
“Shoppers are more interested than ever in the provenance of what they eat. Discounters recognise this, and are offering more fresh products and more premium and household name brands, often in more welcoming environments.”