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Discount Retailers Set to Grow in the U.K.

Discount Retailers Set to Grow in the U.K.

EUROPE–The U.K. discount retail market is expected to grow by 36.1 percent, reaching a total value of £32.5 billion by 2022, according to U.K. research and consulting firm GlobalData.

The discount food and grocery segment in the U.K., currently worth £15.7 billion, is also expected to increase to £21.8 billion by 2022.

EUROPE–The U.K. discount retail market is expected to grow by 36.1 percent, reaching a total value of £32.5 billion by 2022, according to U.K. research and consulting firm GlobalData.

GlobalData’s findings are part of its latest report, U.K. Discounters 2017-2022E.

The research firm also believes discount retailers could gain an extra £9 billion of the total retail market as more consumers are looking for bargains due to inflation. In the last 12 months, 89.4 percent of the U.K. population shopped at a discount retailer, with categories like food and grocery, non-discretionary household goods and health and beauty proving popular among consumers.

Furthermore, the food and grocery sector has the highest market value, worth £15.7 billion in 2017, and is expected to increase to £21.8 billion by 2022–taking away £6 billion from mainstream grocers.

“Food and grocery has enjoyed strong growth over the past decade as even when incomes have been more pressured by inflation and lower real wage growth, people still need to buy the same amount of food,” says Molly Johnson-Jones, senior food and grocery analyst, Global Data. “The F&G discounters have taken advantage of this by extending their range to cater for all consumer needs and growing their premium and fresh ranges to ensure that they can be a one-stop-shop for the weekly shop.”

Meanwhile, the DIY and gardening segment is expected to increase 46.6 percent by 2022, while the homewares category is forecasted to grow 42.6 percent by 2022. According to GlobalData, consumers are likely to perform fewer and smaller upgrades to their homes during the forecast period, due in large part to a declining disposable income; however, this should benefit discount retailers as they continue to improve their offerings by incorporating more on-trend items.

“Our report findings confirm that discounters have done an exceptional job in gaining market share of frequently purchased items by changing the perception of discounter own label products in F&G while at the same time undercutting mainstream retailers on branded items in H&B and household,” says Johnson-Jones. “This combined approach has proven to be very disruptive in the market and has contributed to their success.’’

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