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Food and Non-food Discounters - UK - September 2015

OVERVIEW
What you need to know
Areas covered in this report
What is a discounter?
EXECUTIVE SUMMARY
The market
Discounters
Market size and forecast
Figure 1: All discounters’ sector size (£m excl VAT), 2010-20
Discounters and the economy
Companies, brands and innovation
Figure 2: Discounters’ market shares, 2014
Product mix
Figure 3: Non-food discounters’ estimated product mix, 2014
Innovation
Online
The consumer
Where people shop
Figure 4: Discounters: Frequency of visits, July, 2015
Figure 5: Repertoire of shopping frequency, July 2015
Products bought
Figure 6: Products bought from food and non-food discounters in the last three months, July 2015
Appeal of discounters
Figure 7: Consumer attitudes towards discounters, July 2015
What would make people shop at discounters more?
Figure 8: What would make people shop at discounters more, July 2015
What we think
Challenging
Not just about bargains
Fitting in with the convenience trend
ISSUES AND INSIGHTS
Is the non-food discount sector already overshopped?
The facts
The implications
Who are they really in competition with?
The facts
The implications
How are the underlying trends in the marketplace affecting the non-food discounters?
The facts
The implications
Can the food discounters continue their dramatic growth?
The facts
The implications
Is there a place for online in discount retailing?
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Rapid growth
Not just a product of the recession
Keys to success
Looking forward
MARKET SIZE AND FORECAST
Figure 9: Discounters’ market size, 2009/10-2014/15
Figure 10: Food and non-food discounters’ share of retail sales, 2009-14
Much more than a product of the recession
Figure 11: UK: GDP growth at constant prices, 2005-15
How do they do it?
Aldi/Lidl
Non-food discounters – The multi-price model
Non-food discounters – The fixed-price model
The forecast
Figure 12: All discounters’ sector size (£m excl VAT), 2010-20
Figure 13: Sales and forecast: All discounters, 2010-20
Segmental analysis – Food discounters
Figure 14: Food discounters’ sector size (£m excl VAT), 2010-20
Figure 15: Sales and forecast: Food discounters, 2010-20
Segmental analysis – Non-food discounters
Figure 16: Non-food discounters’ sector size (£m excl VAT), 2010-20
Figure 17: Sales and forecast: Non-food discounters, 2010-20
THE CONSUMER – WHAT YOU NEED TO KNOW
The appeal of a bargain
Very wide use
So much more than for those just short of cash
Broad product appeal
Where could they do better?
WHO SHOPS WHERE?
Figure 18: Discounters: Frequency of visits, July 2015
Figure 19: Repertoire of shopping frequency, July 2015
Figure 20: Profile of customers who have bought from leading discounters in the last three months, July 2015
Discounters by region
Figure 21: Discounters: Regional strengths and weaknesses, July 2015
PRODUCTS BOUGHT
Figure 22: Products bought from any discounter in the last three months, July 2015
Figure 23: Products bought from food and non-food discounters in the last three months, July 2015
Figure 24: Profile of food and non-food discounter shoppers, by products bought, July 2015
Figure 25: Discounters used, by products bought, July 2015
WHY DO PEOPLE SHOP AT DISCOUNTERS?
Figure 26: Consumer attitudes towards discounters, July 2015
Figure 27: Consumer attitudes towards discounters, by discounter shopped at, July 2015
WHAT WOULD MAKE PEOPLE SHOP AT DISCOUNTERS MORE?
Figure 28: What would make people shop at discounters more, July 2015
Figure 29: What would make people shop more at discounters, by where they already shop, July 2015
Poundland vs 99p Stores
WHY DO PEOPLE NOT SHOP AT DISCOUNTERS?
Figure 30: Why consumers hadn’t shopped at a discounter in the last three months, July 2015
KEY PLAYERS – WHAT YOU NEED TO KNOW
Aldi and Lidl driving all before them
Poundland leads the field in fixed-price discounters
B&M and Home Bargains the leaders in multi-price discounting
Online – Most are trying to do it
KEY PLAYERS
Figure 31: Leading discounters’ sales, 2009/10-2014/15
Figure 32: Leading discounters’ operating profits, 2009/10-2014/15
Figure 33: Leading discounters’ operating margins, 2009/10-2014/15
Figure 34: Leading discounters’ outlet numbers, 2009/10-2014/15
Figure 35: Leading discounters’ sales per outlet, 2009/10-2014/15
Figure 36: Leading discounters’ sales per sq m, 2009/10-2014/15
INNOVATION AND LAUNCH ACTIVITY
Instant reward scheme
Retailers responding to changing consumer shopping habits…
…new discount grocery chain targeting value-conscious shoppers
…new chain of low-priced clothing stores
…discount second-hand jewellery chain
…department store group launches chain of discount stores
…‘like-new’ products discount outlet
Former Asda chief launches discount fashion chain
Fixed-price discounter focusing on suburban locations
Store on stilts
Figure 37: Lidl, Terenure, Ireland
Pop-up discount store
Specialty food discount store
Online pound shops
BRAND COMMUNICATION AND PROMOTION
Figure 38: Recorded above-the-line, online display and direct mail total advertising expenditure by the UK’s leading discounters, 2010-14
Top advertisers
Figure 39: Recorded above-the-line, online display and direct mail total advertising expenditure by leading UK discounters, 2010-14
Share of advertising spend
Figure 40: Recorded above-the-line, online display and direct mail total advertising expenditure by the UK’s leading discounters, by media type, 2011-14
A note on adspend
ONLINE
Figure 41: Discounters with transactional websites, 2015
SPACE ALLOCATION SUMMARY
Figure 42: Food discounters: Summary space allocation estimates, August 2015
Figure 43: Fixed-price non-food discounters: Summary space allocation estimates, August 2015
Figure 44: Multi-price non-food discounters: Summary space allocation estimates, August 2015
Figure 45: Discounters: Detailed space allocation estimates, August 2015
RETAIL PRODUCT MIX
Food discounters
Figure 46: Food discounters’ estimated product mix, 2014
Non-food discounters
Figure 47: Multi-price non-food discounters‘ estimated product mix, 2014
Figure 48: Fixed-price non-food discounters’ estimated product mix, 2014
Sales densities
Figure 49: Leading discounters, estimated sales densities, 2014
MARKET SHARES
Figure 50: Discounters’ market shares, 2012-14
99P STORES LTD
What we think
Background
Company performance
Figure 51: 99p Stores Ltd: Group financial performance, 2009/10-2013/14
Figure 52: 99p Stores Ltd: Outlet data, 2009/10-2013/14
Retail offering
ALDI STORES LTD (UK & IRELAND)
What we think
Why is Aldi doing so well?
How does it do it?
Where next?
Background
Company performance
Figure 53: Aldi Stores Ltd (UK & Ireland): Group financial performance, 2009/10-2013/14
Figure 54: Aldi Stores Ltd (UK & Ireland): Outlet data, 2009/10-2013/14
Retail offering
B&M RETAIL
What we think
Background
Company performance
Figure 55: B&M European Value Retail: Group financial performance, 2011/12-2014/15
Figure 56: B&M European Value Retail: Outlet data, 2011/12-2014/15
Retail offering
Figure 57: B&M sales mix, 2013
Figure 58: B&M sales mix, by product price, 2013
HOME BARGAINS (TJ MORRIS LTD)
What we think
Background
Company performance
Figure 59: TJ Morris Ltd: Group financial performance, 2009/10-2014/15
Figure 60: TJ Morris Ltd: Outlet data, 2009/10-2014/15
Retail offering
LIDL (UK)
What we think
Background
Company performance
Figure 61: Lidl (UK): Estimated group financial performance, 2010/11-2014/15
Figure 62: Lidl (UK): Outlet data, 2010/11-2014/15
Retail offering
POUNDLAND LTD
What we think
Background
Company performance
Figure 63: Poundland Ltd: Group financial performance, 2010/11-2014/15
Figure 64: Poundland Ltd: Outlet data, 2010/11-2014/15
Retail offering
Figure 65: Poundland product mix, 2014
POUNDSTRETCHER
What we think
Background
Company performance
Figure 66: Poundstretcher: Group financial performance, 2009/10-2013/14
Figure 67: Poundstretcher: Outlet data, 2009/10-2013/14
Retail offering
POUNDWORLD RETAIL LTD
What we think
Poor performance
TPG buying in
Where next?
Background
Company performance
Figure 68: Poundworld Retail Ltd: Group financial performance, 2009/10-2014/15
Figure 69: Poundworld Retail Ltd: Outlet data, 2009/10-2014/15
Retail offering
THE ORIGINAL FACTORY SHOP LTD
What we think
Background
Company performance
Figure 70: The Original Factory Shop Ltd: Group financial performance, 2009/10-2014/15
Figure 71: The Original Factory Shop Ltd: Outlet data, 2009/10-2014/15
Retail offering
WILKINSON HARDWARE STORES LTD
What we think
Background
Company performance
Figure 72: Wilkinson Hardware Stores Ltd: Group financial performance, 2010/11-2014/15
Figure 73: Wilkinson Hardware Stores Ltd: Outlet data, 2010/11-2014/15
Retail offering
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Mintel’s discounter market size
Forecast methodology
Financial definitions
VAT
Abbreviations

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