Discount retailers are continuing to reshape the UK and Irish shopping landscape – and it’s putting mainstream supermarkets under ever more pressure. New research from the Local Data Company (LDC) has laid bare the extent at which discount stores are have turned up the heat in the UK, with major brands struggling to keep pace.
In the period between 2010 and 2015, discount retailers opened nearly 1500 new stores – a rise of 52 per cent. It compares with supermarkets such as Tesco and Sainsbury’s, which expanded by 33% during that five-year period. Not only that, but discount store growth was three times as fast as the “Big Four” supermarkets in 2015 alone.
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Discount Retailers and the Future of Food Retail
The LDC research underlines a trend that our team has experienced first-hand. Our bespoke fridge rental solutions have helped to support the robust growth of two large discount retailers in the UK and Ireland. After all, we offer total certainty when it comes to operational planning – a significant advantage for any growing business.
The discount retail revolution is a major challenge for mainstream brands, which are losing market share and seeing profits decline. How can the mainstream retailers adapt, though? Sainsbury’s has seen its sales and profits fall after cutting its prices, while Tesco has been selling off its non-grocery operations such as Dobbies Garden Centre.
A second LDC report reveals that each of the “Big Four” supermarkets have turned to convenience as a means of taking on discount retailers. In each year between 2011 and 2015, these mainstream brands opened smaller stores at a much faster rate than larger formats. And yet now growth in the convenience store segment has slowed.
So, what does the future of retail hold? Is there room for both mainstream and discount retailers? Can the growth of discounters be sustained? And will the arrival of Amazon Fresh and other online formats dilute the market even more? The latest IGD forecasts for the UK food and grocery market provide some insight into the years ahead.
In the coming five years, IGD does place online formats and discounters in the fast lane for growth. But supermarkets can perhaps look forward to some good news too. The expected 10% expansion in the domestic market will deliver some much-needed stability to the “Big Four” – even if the food retail landscape has changed forever.
Photo: Stephen McKay/geograph.org.uk
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