Table of Contents
Overview
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- Key issues covered in this Report
- What is a discounter?
- COVID-19: market context
- Economic and other assumptions
Executive Summary
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- Impact of COVID-19 on food and non-food discounters
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- Figure 1: Short, medium and long term impact of COVID-19 on food and non-food discounters, 5 October 2020
- The market
- Discount sector growth continues to slow
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- Figure 2: All discounters’ sector size (ex-VAT), 2015-25
- Food discounters account for around 13% of the UK’s grocery market
- Companies and brands
- Market leading Aldi sees another year of strong growth
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- Figure 3: Leading discounters’ estimated share of all discount sales, 2019
- Aldi is ahead of the competition when it comes to customer experience
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- Figure 4: Key metrics for selected brands, July 2020
- The consumer
- Discounter shopping is ubiquitous in the UK
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- Figure 5: Discounters typically shopped with, May 2020
- Younger shoppers key, but all demographics shopping at discounters
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- Figure 6: Discounter usage, by age group, May 2020
- Online retail remains under-utilised by discounters
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- Figure 7: Discounters shopped online, May 2020
- Food cupboard items are the most popular for discounter shoppers
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- Figure 8: Food item purchasing at food discounters, May 2020
- Household cleaning products are most popular non-food purchases
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- Figure 9: Non-food product purchasing habits at discounters, May 2020
- Just a fifth of shoppers would shop elsewhere if they had more money
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- Figure 10: Attitudes towards discount shopping, May 2020
- Two fifths of shoppers worry about social distancing in discount stores
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- Figure 11: Attitudes towards discounter shopping since COVID-19 outbreak, May 2020
Issues and Insights
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- COVID-19: an opportunity
- COVID-19: a challenge
- Innovation and expansion in non-food
The Market – Key Takeaways
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- Confidence and spending hit by pandemic
- Discount sector growth was slowing until COVID-19
- Current situation provides opportunities for the discounters
- Aldi and Lidl remain dominant in the sector
- Online retail will be the next frontier for discounters
Market Drivers
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- Consumer confidence recovery could be temporary
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- Figure 12: The financial confidence index, January 2017-July 2020
- Real wages drop sharply as recession hits the UK
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- Figure 13: Real wage growth: average weekly earnings vs inflation, Jan 2016-August 2020
- Spending patterns changed by reduced confidence
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- Figure 14: Confirmed and planned spending activities, Jan 18-sep 20
- Retail sales dropped dramatically in the first lockdown
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- Figure 15: Annual % change in all UK retail sales (excluding fuel), by value and volume, Jan 2019-Jul 2020
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- Figure 16: Percentage change in value retail sales, by category, in the first half (Jan-Jul) 2020
Market Size and Forecast
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- COVID-19’s impact on retail and the discount sector
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- Figure 17: Short, medium and long term impact of COVID-19 on discounter market, 05 October 2020
- Lockdown
- Re-emergence
- Recovery
- Pre-COVID-19 discounter growth was stable and slowing
- COVID-19 to drive strong growth in 2020
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- Figure 18: All discounters’ sector size (ex-VAT), 2015-25 (09 November)
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- Figure 19: Discount sector size as a percentage of all retail sales (ex-fuel, ex VAT), 2015-20
- Figure 20: All discounters’ sector size (ex-VAT), detailed forecast 2015-25
- The food discount sector
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- Figure 21: Food discounters’ sector size (ex-VAT), 2015-25 (09 November October)
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- Figure 22: Food discounters’ sector size (ex-VAT), detailed forecast, 2015-25
- The non-food discount sector
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- Figure 23: Non-Food discounters’ sector size (ex-VAT), 2015-25 (09 November)
- Figure 24: Non-food discounters’ sector size (ex-VAT), detailed forecast, 2015-25
- Market drivers and assumptions
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- Figure 25: Key drivers affecting Mintel’s market forecast, 2015-24 (prepared on 09 November2020)
- Learnings from the last recession
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- Figure 26: Value sales of Aldi and Lidl combined, 2006-12
- Forecast methodology
The Consumer – Key Takeaways
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- More than nine out of 10 shopped with discounters in the past three months
- Discounters appeal to younger consumers
- Discounters lag behind when it comes to online retail
- Cupboard items and fresh fruit/vegetables are footfall drivers in food
- Household cleaning products are the key categories in non-food
- Low prices are not the only factor but they let shoppers spend more in other areas
- People are shopping less in discounters as a result of COVID-19
Where They Shop
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- Discounter shopping is ubiquitous amongst UK consumers
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- Figure 27: Type of discounter used, May 2020
- Aldi and Poundland are the most visited food and non-food discounters
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- Figure 28: Discounters typically shopped with, May 2020
- Food discounters are most regularly visited
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- Figure 29: Frequency of discounters visitation, May 2020
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- Figure 30: Frequency of discounters visitation, shoppers only rebase, May 2020
- Questions around the quality of products remain for some
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- Figure 31: Reasons for not shopping at discounters, May 2020
- Repertoire of stores visited
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- Figure 32: Repertoire of discounters May 2020
Retailer Demographic Comparison
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- Discounters appeal to all ages
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- Figure 33: Discounter usage by age group, May 2020
- Food discounters: appealing to a younger demographic
- Lidl attracts a more price-sensitive and older shopper
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- Figure 34: Food discounter usage by age group, May 2020
- Lidl appears ahead in London and Aldi first choice in the North of England
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- Figure 35: Food discounter usage, by region, May 2020
- Lower-income households key for non-food discounters
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- Figure 36: Non-food discounter usage by age group, May 2020
- Non-food discounters remain most popular in the Midland and Northern regions
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- Figure 37: Non-food discounter usage, by region May 2020
Discounters and Online
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- Wilko is the most commonly used online discounter
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- Figure 38: Discounters shopped online, May 2020
- Discounters without online stores are losing sales to those that do
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- Figure 39: Discounters shopped online against typical discounter shopped with, May 2020
- Attitudes towards online retail
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- Figure 40: Attitudes towards shopping online with discounters, May 2020
Food and Drink Purchases at Discounters
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- Food cupboard items are the key footfall driver for food discounters
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- Figure 41: Food item purchasing at food discounters, May 2020
- Lidl’s bakery remains a differentiator as Aldi edges out the competition in frozen goods
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- Figure 42: Food item purchasing habits at food discounters, May 2020
- Higher-income household shoppers buying beverages and chilled goods
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- Figure 43: Food item purchasing at food discounters by household income, May 2020
Non-food Purchases at Discounters
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- Household cleaning products most popular non-food purchases at discounters
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- Figure 44: Non-food products purchased at discounters, May 2020
- Consumers interested in, but not buying, electrical products
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- Figure 45: Non-food product purchasing habits at discounters, May 2020
- Younger to middle-aged shoppers are the key consumers of non-food items
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- Figure 46: Non-food products typically purchased at discounters by age group, May 2020
Consumer Attitudes towards Price and Experience in Discounters
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- Although low prices are still a factor, the discounters clearly offer more than just value
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- Figure 47: Attitudes towards discount shopping May 2020
- Younger shoppers using discounters to save money for more discretionary spending
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- Figure 48: Attitudes towards discount shopping, by age, May 2020
The Effect of COVID-19 on Discounter Shopping Behaviour
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- Consumers remain concerned about contracting the virus
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- Figure 49: Level of concern regarding exposure to COVID-19, February-September 2020
- These concerns led to increased online shopping
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- Figure 50: COVID-19 behaviour: online shopping use, April-Sept 2020
- Consumers are also worried about their financial situation
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- Figure 51: Impact COVID-19 will have in the UK, 18-24 June 2020
- Younger shoppers are set to suffer more when the furlough scheme ends
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- Figure 52: Changes in lifestyle as a result of COVID-19 by age 21-28 May 2020
- Consumers are shopping less at non-food discounters
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- Figure 53: Shopping behaviour since COVID-19 outbreak, May 2020
- Shoppers are worried about social distancing in smaller stores
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- Figure 54: Attitudes towards discounter shopping, May 2020
CHAID Analysis – Food and Non-food Discounters
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- Methodology
- Young parents favour full online shops at the discounters
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- Figure 55: Food and non-food Discounters – CHAID – Tree output, June 2020
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- Figure 56: Food and non-food discounters – CHAID – Table output, June 2020
Leading Retailers – Key Takeaways
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- Aldi remains ahead of the market
- Food discounter expansion slows
- Aldi’s excellent shopping experience sets retailer apart
Leading Retailers – Key Metrics
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- Revenue
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- Figure 57: Leading discounters’ sales, 2015/16-2019/20
- Operating profits and margins
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- Figure 58: Leading discounters’ operating profits, 2015/16-2019/20
- Figure 59: Leading discounters’ operating margins, 2015/16-2019/20
- Stores and sales-per-outlet
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- Figure 60: Leading discounters’ outlet numbers, 2015/16-2019/20
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- Figure 61: Leading discounters’ sales per outlet, 2015/16-2019/20
Market Share
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- Food discounters account for two thirds of the market
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- Figure 62: Leading discounters’ estimated share of all discount sales, 2019
- Figure 63: Leading 10 discounters’ share of all discount sales, 2015-19
- Food discounters: Aldi and Lidl combined share of 12.7% of grocery market
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- Figure 64: Estimated share of all grocery retail sales (ex-VAT, ex-fuel) by the leading players, 2019
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- Figure 65: Grocery market share: the big four vs the food discounters, 2013-19
- Non-food discounters: still gaining share in the mixed goods sector
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- Figure 66: Non-food discounters’ share of all mixed goods retail sales, 2010-19
- Savers
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- Figure 67: Savers: market share of the specialist health and beauty sector (ex-VAT), 2013-19
Launch Activity and Innovation
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- COVID-19 driving innovations and change
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- Figure 68: Aldi COVID-19 pandemic traffic light system, 2020
- Discounting online
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- Figure 69: Aldi and Deliveroo partnership, 2020
- New stores, new formats, new ranges
- Discounters acting on new trends
- Lidl breaks new ground with loyalty
Advertising and Marketing Activity
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- Total advertising spend remained flat in 2019
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- Figure 70: Total recorded above-the-line, online display and direct mail total advertising expenditure by the UK’s leading discounters, 2015-19
- Lidl and Aldi are the biggest advertising spenders
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- Figure 71: UK leading discounters: recorded above-the-line, online display and direct mail total advertising expenditure, 2015-19
- Advertising spend in 2019 follows key seasonal events
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- Figure 72: Total recorded above-the-line, online display and direct mail total advertising expenditure by UK leading discounters, by month, 2019
- Almost 80% of all advertising spend on TV and press channels
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- Figure 73: Total recorded above-the-line, online display and direct mail total advertising expenditure by the UK’s leading discounters, by media type, 2019
- What we’ve seen in 2020
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
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- Figure 74: Attitudes towards and usage of selected brands, July 2020
- Key brand metrics
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- Figure 75: Key metrics for selected brands, July 2020
- Brand attitudes: Aldi and Lidl considered particularly innovative
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- Figure 76: Attitudes, by brand, July 2020
- Brand personality: food discounters considered ethical
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- Figure 77: Brand personality – Macro image, July 2020
- Aldi and Lidl considered cutting edge and aspirational
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- Figure 78: Brand personality – Micro image, July 2020
- Brand analysis
- Aldi’s brand image remains ahead of rivals
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- Figure 79: User profile of Aldi, July 2020
- Wilko is a trusted player with a good online service
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- Figure 80: User profile of Wilko, July 2020
- Lidl has a high awareness but still lags behind Aldi
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- Figure 81: User profile of Lidl, July 2020
- Home Bargains, lowest awareness but most trusted
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- Figure 82: User profile of Home Bargains, July 2020
- B&M trustworthy but considered boring
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- Figure 83: User profile of B&M, July 2020
- Poundland most commonly used discounter
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- Figure 84: User profile of Poundland, July 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- VAT
- Abbreviations
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