GlobalData Plc
  • Press Release

    Discount retailers to grab a further £9bn of consumer spend by 2022

The UK Discount Retail market is set to grow by 36.1% reaching a total value of £32.5bn by 2022 according to GlobalData, a recognized leader in providing business information and analytics.

The company’s latest report: ‘UK Discount Retailing 2017-2022‘ reveals that discount retailers could gain an extra £9bn slice of the total retail market as they become a more appealing destination for consumers looking for bargains as inflation continues to squeeze their disposable income.

This will be good news for Aldi, Lidl and B&M Bargains which dominate the channel, with a combined share of over 70% of the discount retail market. DIY & gardening, health & beauty and homewares will deliver the strongest category growth.

89.4% of the UK population have shopped at a discounter in the last 12 months with food & grocery (F&G), non-discretionary household goods and health & beauty (H&B) the most popular product categories with shoppers.

As Molly Johnson-Jones, Senior Food & Grocery Analyst from GlobalData Retail comments: “Our report findings confirm that discounters have done an exceptional job in gaining market share of frequently purchased items by changing the perception of discounter own label products in F&G while at the same time undercutting mainstream retailers on branded items in H&B and household. This combined approach has proven to be very disruptive in the market and has contributed to their success.’’

Food & grocery is the sector with the highest market value, worth £15.7bn in 2017, and will grow to £21.8bn by 2022 – taking away another £6bn from the mainstream grocers. As perception and trust in own-label has been earned by the discounters in groceries, this is the sector which the mainstream retailers should be the most concerned about as the barriers to entry have already been overcome.

Johnson-Jones explains: “Food & grocery has enjoyed strong growth over the past decade as even when incomes have been more pressured by inflation and lower real wage growth, people still need to buy the same amount of food. The F&G discounters have taken advantage of this by extending their range to cater for all consumer needs and growing their premium and fresh ranges to ensure that they can be a one-stop-shop for the weekly shop.”

DIY & gardening and homewares are forecast to grow 46.6% and 42.6% respectively for the period 2017-2022e, as discount retailers gain market share from mainstream DIY retailers by offering consumers lower cost solutions for household maintenance and upgrades. Indeed the rollout of larger out-of-town store formats has facilitated broader ranges, providing them with more authority in the home sectors.

Consumers are likely to perform fewer and smaller upgrades on their homes during the forecast period due to declining disposable income. This will benefit discount retailers homewares sales as they continue to improve their shopper appeal by increasing their range and incorporating greater trend influence – while ensuring affordability which is crucial for driving impulse and gifting purchases.

Johnson-Jones adds: “The discounters have expanded their range in the DIY & gardening market at a time when consumers are seeking reduced cost solutions for doing up their homes and gardens – B&M will particularly outperform in this area as it adds garden centres to its retail estate over the next few years.”

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