Table of Contents
Overview
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- What you need to know
- Areas covered in this Report
- What is a discounter?
Executive Summary
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- The market
- Overall the discount sector is growing strongly…
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- Figure 1: All discounters’ sector size (ex-VAT), 2013-23
- … but the food discounters are leading the way
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- Figure 2: Historical and forecast growth rates in the food and non-food discount sectors, 2015-23
- Inflation is easing
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- Figure 3: CPIH, monthly percentage change over 12 months, July 2016-July 2018
- Companies and brands
- Aldi and Lidl account for half of the discount sector, whilst B&M and Home Bargains are the biggest non-food players
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- Figure 4: Leading discounters’ estimated share of all discount sales, 2017
- Combined, the food discounters now account for over 10% of the grocery market
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- Figure 5: Grocery market share: The Big Four vs The Food Discounters, 2010-17
- Aldi excelling in the experience stakes
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- Figure 6: Key metrics for selected brands, July 2018
- The consumer
- Nine in 10 shopped with discounters in the past three months
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- Figure 7: Discounters shopped with in the last three months, June 2018
- Younger consumers more likely to shop with discounters
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- Figure 8: Food discounters: Usage of Aldi and Lidl on a total and most often basis, by household income, June 2018
- Over a quarter of discount shoppers shop online, but there is demand for more to launch in the space
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- Figure 9: Discounters shopped with online in the past three months, June 2018
- Chilled and fresh drivers for food discounters
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- Figure 10: Frequency of food purchasing at food discounters, June 2018
- Household cleaning, and health and beauty key categories in non-food discounting
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- Figure 11: Non-food products purchased at discounters in the last three months, by frequency of purchase, June 2018
- Wider ranges and an easier checkout two priories for improvements
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- Figure 12: Improvements needed at discounters, by rank, June 2018
- Most feel there is less stigma to shopping with discounters, and their use is impacting price perception elsewhere
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- Figure 13: Attitudes towards price, premium, and online at discounters, June 2018
- What we think
Issues and Insights
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- Tesco enters the discount market with Jack’s
- The facts
- The implications
- Necessary consolidation in the non-food discount sector
- The facts
- The implications
- Premium value: the rising importance of premium at the food discounters
- The facts
- The implications
The Market – What You Need to Know
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- Inflation is easing and in turn so has pressure of consumer finances
- Consumer confidence recovers in 2018
- Overall the discount sector is growing strongly…
- … but the food discounters are leading the way
Market Drivers
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- Inflation drops back in 2018
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- Figure 14: CPIH, monthly percentage change over 12 months, July 2016-July 2018
- Real earnings eroded by inflation in 2017
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- Figure 15: Real average weekly earnings (seasonally adjusted), single month % change year-on-year, February 2014-June 2018
- Spending on food and drink grows faster than total spending
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- Figure 16: Consumer spending, 2013-17
- Consumer confidence recovers in 2018
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- Figure 17: Consumer confidence tracker, January 2016-August 2018
- Consumers turn to the discounters to save money on food bills
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- Figure 18: Preferred ways to save money on food bills, February 2018
- Discounters benefit from increasingly fluid shopping habits
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- Figure 19: How they shop for groceries, 2015-17
Market Size and Forecast
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- Discount sector grew strongly in 2017 but slowdown expected in 2018
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- Figure 20: All discounters’ sector size (ex-VAT), 2013-23
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- Figure 21: Discount sector size as a percentage of all retail sales (ex-fuel, ex-VAT), 2013-18
- Figure 22: All discounters’ sector size (ex-VAT), detailed forecast at current and constant prices, 2013-23
- The food discounters’ segment
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- Figure 23: Food discounters’ sector size (ex-VAT), 2013-23
- Figure 24: Food discounters’ sector size (ex-VAT), detailed forecast at current and constant prices, 2013-23
- The non-food discount sector
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- Figure 25: Non-food discounters’ sector size (ex-VAT), 2013-23
- Figure 26: Non-food discounters’ sector size (ex-VAT), detailed forecast at current and constant prices, 2013-23
- Forecast methodology
The Consumer – What You Need to Know
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- Nine in 10 shopped with discounters in the past three months
- Younger consumers more likely to shop with discounters
- Over a quarter of discount shoppers shop online, but there is demand for more to launch in the space
- Chilled and fresh drivers for food discounters
- Household cleaning, and health and beauty key categories in non-food discounting
- Wider ranges and an easier checkout two priorities for improvements
- Most feel there is less stigma to shopping with discounters, and their use is impacting price perception elsewhere
Where They Shop
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- Aldi and Poundland the most visited discounters
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- Figure 27: Discounters shopped with in the last three months, June 2018
- Food discounters see most frequent visitation
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- Figure 28: Frequency of discounters visitation in the last three months, June 2018
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- Figure 29: Frequency of discounters visitation in the last three months, shoppers only rebase, June 2018
- Repertoire of stores visited
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- Figure 30: Repertoire of discounters visited in the last three months, June 2018
Retailer Demographic Comparison
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- Discounter use is (broadly) universal
- Food discounters: favoured by younger shoppers
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- Figure 31: Food discounters usage in the past three months, by age, June 2018
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- Figure 32: Food discounters: Age profile of those who shopped with Aldi/Lidl most often, June 2018
- Food discounters: breaking away from a natural audience
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- Figure 33: Food discounters: usage of Aldi and Lidl on a total and most often basis, by household income, June 2018
- Food discounters: room for expansion for Heron Foods
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- Figure 34: Food discounters: usage of food discounters, by region, June 2018
- Non-food discounters: Poundland striking a cord with 16-24s
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- Figure 35: Non-food discounters usage in the past three months, by age, June 2018
- Non-food discounters have not broadened the appeal in the same way as the food discounters
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- Figure 36: Non-food discounters usage in the past three months, by household income, June 2018
- Lack of capital coverage for the big-box players
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- Figure 37: Non-food discounters usage in the past three months, by household income, June 2018
Discounters and Online
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- Wilko most used online
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- Figure 38: Discounters shopped with online in the past three months, June 2018
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- Figure 39: Discounters shopped with online in the past three months, by discount retailers used most often, June 2018
- Demand is there for an online discount offer
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- Figure 40: Attitudes towards discounters and online, June 2018
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- Figure 41: Agreements to attitudes towards discounters and online, by age, June 2018
Frequency of Food & Drink Purchasing at Discounters
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- Chilled and fresh drivers for footfall for food discounters
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- Figure 42: Frequency of food purchasing at food discounters, June 2018
- Lower frequency of fresh purchasing amongst ABs, but alcohol is a driver for this group
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- Figure 43: Frequency of food purchasing at food discounters, by socio-economic group, June 2018
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- Figure 44: Frequency of food purchasing at food discounters, by socio-economic group, June 2018
- Lidl’s bakery a driver, but Aldi scores greater frequency on fresh
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- Figure 45: Frequency of food purchasing at food discounters, by socio-economic group, June 2018
Frequency of Non-food Purchasing at Discounters
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- Household and beauty products most popular purchases at non-food discounters
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- Figure 46: Non-food products purchased at discounters in the last three months, June 2018
- Household cleaning products a key driver for patronage
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- Figure 47: Non-food products purchased at discounters in the last three months, by frequency of purchase, June 2018
- Younger consumers generally more likely to buy non-foods from discounters
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- Figure 48: Non-food products purchased at discounters in the last three months, by age, June 2018
What Can Be Improved at Discounters?
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- A wider range the top improvement called for by discount shoppers
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- Figure 49: Improvements needed at discounters, by rank, June 2018
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- Figure 50: Improvements needed at discounters, any rank by age, June 2018
- Lidl shoppers want checkout improvements, B&M shoppers want online
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- Figure 51: Select improvements needed at discounters, any rank by discount retailer shopped at most often, June 2018
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- Figure 52: Select improvements needed at discounters, any rank by discount retailer shopped at most often, June 2018
Attitudes Towards Price and Premium at Discounters
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- Any stigma about shopping at discounters has fallen away
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- Figure 53: Attitudes towards price and shopping at discounters, June 2018
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- Figure 54: Agreement to attitudes towards price and shopping at discounters, by financial situation, June 2018
- European heritage allows food discounters to provide something outside the norm
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- Figure 55: Attitudes towards food discounters, June 2018
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- Figure 56: Attitudes towards food discounters’ premium ranges, by current financial situation, June 2018
Leading Retailers – What You Need to Know
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- Aldi and Lidl continue to lead the market
- Combined, the food discounters now account for over 10% of the grocery market
- Aldi excelling in the experience stakes
- A quarter of space of Poundland is now given over to fashion
Key Metrics
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- Revenue
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- Figure 57: Leading discounters’ sales, 2013/14-2017/18
- Operating profits and margins
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- Figure 58: Leading discounters’ operating profits, 2013/14-2017/18
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- Figure 59: Leading discounters’ operating margins, 2013/14-2017/18
- Stores and sales-per-outlet
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- Figure 60: Leading discounters’ outlet numbers, 2013/14-2017/18
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- Figure 61: Leading discounters’ sales per outlet, 2013/14-2017/18
Market Shares
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- Food discounters account for over half the market
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- Figure 62: Leading discounters’ estimated share of all discount sales, 2017
- Figure 63: Leading 10 discounters’ share of all discount sales, 2013-17
- Food discounters: Aldi and Lidl still applying pressure on the big four
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- Figure 64: Estimated share of all grocery retail sales (ex-VAT, ex-fuel) by the leading players, 2017
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- Figure 65: Grocery market share: The Big Four vs The Food Discounters, 2010-17
- Non-food discounters: context within the mixed-goods sector
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- Figure 66: Non-food discounters’ share of all mixed goods retail sales, 2008-17
- Savers: a small but significant player in the health and beauty market
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- Figure 67: Savers: Market share of the specialist health and beauty sector (ex-VAT), 2011-17
Space Allocation Summary
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- Food discounters – Summary
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- Figure 68: Food discounters: Summary shelf frontage space allocation estimates, September 2018
- Food discounters - Detailed space allocation
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- Figure 69: Food discounters: Detailed shelf frontage space allocation estimates, September 2018
- Non-food discounters – Summary
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- Figure 70: Non-food discounters: Summary shelf frontage space allocation estimates, September 2018
- Non-food discounters – Detailed space allocation
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- Figure 71: Non-food discounters: Detailed shelf frontage space allocation estimates, September 2018
Retail Product Mix
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- Figure 72: Leading discounters estimated sales mix, 2017
- Figure 73: Leading discounters: estimated sales by product, 2017
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- Figure 74: Leading discounters, estimated sales per square metre, 2017
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Innovation and Launch Activity
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- Lidl showcases bakery innovation
- Poundland capitalising on growth in skincare market with own-brand launch
- Car-sharing service for shoppers
- Lidl launches AI wine chatbot
- Tesco discount store rumours
- New ‘softer’ Netto store concept
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- Figure 75: Netto new 3.0 concept store, Copenhagen
- Lidl seduces Parisians with luxury pop-up store
- Cheap food and drink online
Advertising and Marketing Activity
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- Total advertising spend down 14.4% year-on-year in 2017
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- Figure 76: Total recorded above-the-line, online display and direct mail total advertising expenditure by the UK’s leading discounters, 2013-17
- Food discounters are the biggest advertising spenders
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- Figure 77: UK leading discounters: recorded above-the-line, online display and direct mail total advertising expenditure, 2013-17
- Advertising expenditure peaks around key seasonal events
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- Figure 78: Total recorded above-the-line, online display and direct mail total advertising expenditure by UK leading discounters, by month, 2017
- 80% of advertising expenditure channelled through TV and press
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- Figure 79: Total recorded above-the-line, online display and direct mail total advertising expenditure by the UK’s leading discounters, by media type, 2013-17
- What we’ve seen in 2018
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
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- Figure 80: Attitudes towards and usage of selected brands, July 2018
- Key brand metrics
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- Figure 81: Key metrics for selected brands, July 2018
- Brand attitudes: Food discounters lead on trust and innovation
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- Figure 82: Attitudes, by brand, July 2018
- Brand personality: Poundland lacks excitement
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- Figure 83: Brand personality – macro image, July 2018
- Aldi offers innovation, aspiration, and reliability
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- Figure 84: Brand personality – micro image, July 2018
- Brand analysis
- Aldi stands apart with the strongest brand
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- Figure 85: User profile of Aldi, July 2018
- Home Bargains the best performing brand of the non-food discounters
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- Figure 86: User profile of Home Bargains, July 2018
- B&M stands out despite lower recommendation levels
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- Figure 87: User profile of B&M, July 2018
- Lidl loses ground to Aldi
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- Figure 88: User profile of Lidl, July 2018
- Poundland is most used but least recommended
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- Figure 89: User profile of Poundland, July 2018
Aldi Stores Ltd
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- What we think
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- Figure 90: Aldi, London, February 2018
- Background
- Company performance
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- Figure 91: Aldi Stores Ltd (UK & Ireland): Group financial performance, 2013-17
- Figure 92: Aldi Stores Ltd (UK & Ireland): Outlet data, 2013-17
- Retail offering
Lidl (UK)
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- What we think
- Background
- Company performance
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- Figure 93: Lidl (UK): Group financial performance, 2013/14-2017/18
- Figure 94: Lidl (UK): Outlet data, 2013/14-2017/18
- Retail offering
B&M European Value Retail
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- What we think
- Background
- Company performance
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- Figure 95: B&M European Value Retail: Group financial performance, 2012/13-2017/18
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- Figure 96: B&M Retail Ltd: Outlet data, 2012/13-2017/18
- Retail offering
Home Bargains (TJ Morris Ltd)
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- What we think
- Background
- Company performance
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- Figure 97: TJ Morris Ltd: Group financial performance, 2012/13-2017/18
- Figure 98: TJ Morris Ltd: Outlet data, 2012/13-2017/18
- Retail offering
Poundland Ltd (UK)
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- What we think
- Background
- Company performance
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- Figure 99: Poundland Ltd: Group financial performance, 2013/14-2017/18
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- Figure 100: Poundland Ltd: Outlet data, 2013/14-2017/18
- Retail offering
Wilko Retail Ltd
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- What we think
- Background
- Company performance
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- Figure 101: Wilko: Group financial performance, 2013/14-2017/18
- Figure 102: Wilko: Outlet data, 2013/14-2017/18
- Retail offering
Appendix – Data Sources, Abbreviations, and Supporting Information
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- Data sources
- VAT
- Financial definitions
- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Forecast methodology
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