Discount retail sector to grow by two-thirds to £12.4bn by 2017, IGD reports

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IGD: discount growth

IGD: discount growth

Discount grocery retail is enjoying a surge in popularity, with significant numbers of British consumers from across the social spectrum increasingly opting to buy goods from discount stores, according to a new report commissioned by specialist wholesaler Rowan, and undertaken by research charity IGD.

The report found that the discount channel – which encompasses food discounters such as Aldi and Lidl, pound shops and high street discount stores – is currently used by just under half (46%) of shoppers, and is expected to expand dramatically:

  • 26% of shoppers plan to use food discounters more in the coming year
  • 22% intend to use high street discounters more
  • In total, the discount channel is expected to grow by 64.7% to be worth £12.4bn by 2017

James Russell, commercial director of Rowan, said: “The discount channel is booming and is increasingly significant. However, rather than being a short-term trend in the retail sector, it’s actually a long-term cultural shift. What I believe we are seeing is a permanent change in the way the UK shops.”

The report’s key findings included:

  • Discounters are attracting a broad spectrum of shoppers. Discount shoppers reflect the rest of society, with 77% coming from the ABC1 demographic groups
  • 85% of discount shoppers plan to continue using discounters even after their personal financial circumstances improve – indicating that although the current boom may have been partly triggered by tough economic conditions, the sector should remain buoyant even after the economy returns to growth
  • Consumer shopping habits are changing. Many people who would previously have done one weekly shop are now shopping more often, and using discount stores for some of their grocery needs. Growing numbers of food and household goods companies are seeing the discount channel as an opportunity, encouraged by the impressive growth and the high volumes that discounters are capable of delivering

Russell said: “Many shoppers, finding themselves more financially stretched than a decade ago, have changed their shopping habits, trying different types of store, including discounters. More and more of them like what they find, and appear set to continue visiting the discount stores even if the money returns.

“Over the next few years we’ll see more discounters, selling a greater range of products to a greater variety of people. I believe it’s a permanent shift.

“More and more suppliers are seeing the channel as a strategic opportunity. More stores, combined with more attractive in-store environments that are enticing new shoppers through their doors, will encourage further growth in the channel.”