The discounter sector is expanding in the grocery market amidst competition.
- Poundland, B&M, and others are venturing into chilled and frozen categories.
- Analysts cite food as a key driver of footfall and sales for discounters.
- Economic factors increase consumer reliance on low-cost grocery options.
- Retail giants are adopting strategies to counter discounter growth.
The discount sector is actively increasing its presence in the grocery market, even in a landscape as competitive as the UK’s. This shift includes significant moves into chilled and frozen food categories by brands such as Poundland, B&M, Home Bargains, and Poundstretcher. These retailers see grocery expansion as a strategic growth area, recognizing food’s ability to drive customer traffic and enhance sales across their product ranges.
According to industry experts, such as Nick Gladding from Global Data, discounters are scaling up their grocery offerings to leverage price competitiveness and to diversify shopping experiences. The entrance into fresh and food-to-go categories is designed to appeal to a wider range of customer needs and shopping missions. Poundstretcher offers a varied selection of foods, while its competitors have more aggressively expanded into the fresh and frozen grocery sectors.
Poundland, for instance, embarked on a substantial grocery initiative in early 2022, introducing fresh products in its Nottingham flagship and extending the range throughout its network. By August of the same year, it launched fresh meat and fish offerings. As of June 2023, Poundland had incorporated frozen and chilled foods in over 570 stores and initiated price comparisons with major supermarkets to solidify its position.
Home Bargains has similarly expanded its food selection with dedicated areas for fresh and frozen products. It also added in-store bakeries in 64 locations, featuring items like baguettes and pastries, capitalizing on a growing market for fresh baked goods. The retailer plans to expand this offering further.
Market insights suggest the cost-of-living crisis has driven more shoppers toward discounters, with these stores providing a viable option for budget-conscious consumers through low prices and diverse selections. According to Bryan Roberts of IGD, the discounter model fits well with current consumer economics.
Supermarket chains, aware of the encroaching threat, have started countermeasures such as price matching. For example, Asda has implemented price matches for selected items available at Home Bargains, although this tactic has mixed potential implications for brand perception. Reviews suggest that while it neutralizes some competitive edge, it might inadvertently draw more attention to discounters.
Analysts predict continued growth for discounters in the grocery sector, with projections of significant revenue increases. They note opportunities for these brands to further penetrate core grocery categories, akin to the strategies employed by Aldi and Lidl.
The presence of discounters is expected to impact smaller, independent stores the most, especially those with higher prices and lower product quality, potentially shifting quick shopping trips away from them. This ongoing trend underscores the dynamic and shifting landscape of the grocery retail market.
The rise of discounters in the grocery sector signals a pivotal shift in consumer buying patterns, posing a notable challenge to traditional retailers.
