Research suggests opportunities for discount food retailersÂ…

Research for Discount Retailing, a new Market Report from Key Note, suggests that there is a clear opportunity for discount food retailers to make use of different formats, such as smaller outlets in town centres or stores on major commuter roads.

When asked for reasons for not shopping at discount food retailers, the most common answer from respondents to Key Note’s survey was that they were not conveniently located, with 42.2% of the consumers who did not shop at these retailers agreeing with this statement.

The survey also reveals that the next most-common reason for not using discount food retailers was lack of product availability, with 8.6% of the consumers who did not use these stores agreeing with the statement: ‘I cannot get everything I need there’.  Lack of choice was another common reason among the consumers who did not shop at these retailers, with 7% agreeing with this statement.  Being a similar problem to the issue of lack of product range, these findings indicate that, as well as increasing the types of product in stores, discount food retailers would also benefit from increasing the number of lines within each category. 

There is, however, still evidence of some class snobbery regarding discount grocery retailers.  2.6% of respondents to the Report’s survey, who did not shop at discount food retailers in 2009, believe that these types of stores are for people on a low income.  Agreement with this category was high among 25 to 54 year-olds, those in the A social grade, those working full time and those living in the South West.

While UK consumers were traditionally reluctant to embrace discount grocery retailing, attitudes began to change in late 2007 when the economic downturn took hold and consumers were forced to shop around to make their money stretch further.  During 2007 and 2008, discount grocery retailers were experiencing double-digit monthly sales growth; however, in 2009, the leading supermarkets began an aggressive response, investing heavily in their own-label offerings.  This severely hindered the success of the discount retailers, suggesting that growth in the long term will be difficult to achieve in this fiercely competitive environment.

Key Note forecasts that the total UK discount retailing market (including non-grocery discount retailing) will grow by 21.6% between 2009 and 2013 to reach £28.73bn.  While growth will be particularly strong in 2009 (5.5%) as consumers look to save money during the recession, it will continue to be strong and relatively stead throughout the forecast period as many shoppers will remain faithful to the discounters after the economy has recovered.