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In Europe, the Discount Grocery Model has Proved Highly Successful

Dublin (PRWEB) June 30, 2006

Research and Markets (http://www.researchandmarkets.com/reports/c38884) has announced the addition of Discount Retailing Market Report 2006 to their offering.

This report analyses the discount retailing market in the UK. The market is broadly divided into discount grocery retailers, which include companies such as Aldi Stores Ltd, Lidl Ltd and Netto Foodstores Ltd, and discount non-grocery retailers, which include ASDA Group Ltd, Matalan PLC, The Peacock Group PLC, Primark Stores Ltd and Tesco PLC.

Companies in the grocery sector all tend to follow a similar business model, which involves limiting costs to a bare minimum by focusing on a relatively small range of goods. Most of their products are own label and the number of big-name branded goods is limited. Retailers in the non-grocery sector tend to focus on clothing and footwear. They also follow a simple business model, mainly selling cheaply produced, foreign-made clothes in no-frills environments. Discount designer clothes retailers, such as TK Maxx, also operate ‘opportunistic buying’ systems, taking advantage of goods at low prices as they become available.

In Europe, the discount grocery model has proved highly successful, but the European discounters have not met with the same success in the UK, where they have a small 4% share of the food market. However, the discount grocery sector has gained a new lease of life in the past 5 years (2001 to 2005), with growth picking up after apparently stalling in the late 1990s. This has been helped by an expanded programme of store openings by the major players in the sector. However, companies such as Aldi have also adapted their stores to increase their appeal among British shoppers. Good growth in 2005 might also be a reflection of the slowdown in the economy, with more consumers turning to discounters as they attempt to reduce their spending.

The non-grocery sector has also enjoyed strong levels of growth over the past 5 years. Sales of clothing have soared as a result of falling prices and the trend towards ‘fast fashion’. Women’s clothing prices have fallen by 34% since 1995, as a result of new chains having moved into the UK, supermarkets having added clothing to their ranges and budget stores carrying fresh French designs within weeks of their release in Paris. Cheap imports of clothing, which accounted for around £7bn of sales in 2005, are fuelling the boom in sales of discount clothes. Between 1995 and 2005, discount clothing’s share of all clothing sales more than doubled.

The outlook for the discount retailing market is extremely promising, with sales expected to be driven by several factors, including the rapid expansion of stores by both grocery and non-grocery retailers; the growing acceptance by UK consumers of the ‘fast fashion’ concept and the no-frills business model adopted by the grocery discounters; the increasing availability of low-cost grocery items and clothing, as a result of the increasing penetration of imports; and the ageing of the population with increasing numbers of people on fixed incomes. Indeed, we believe that the market for the discount retailers will expand at between three and four times the rate of inflation expected over the period 2006 to 2010.

Companies Mentioned include:

Aldi Stores Ltd

ASDA Group Ltd

Costco Wholesale UK Ltd

Instore PLC

Kwik Save Ltd

Lidl Ltd

Makro Self Service Wholesalers Ltd

Matalan PLC

Netto Foodstores Ltd

New Look Group Ltd

The Peacock Group PLC

Poundland Ltd

Primark Stores Ltd

Tesco PLC

TJ Hughes Ltd

TK Maxx

For more information visit http://www.researchandmarkets.com/reports/c38884

Laura Wood

Senior Manager

Research and Markets

Fax: +353 1 4100 980

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