Discounter Sector Set For Strong Growth Next Year Amid Economic Uncertainty

Namnews, 25th November 2021

Shoppers in the UK are forecast to spend £34.4bn at food and non-food discounters in 2022 – an annual increase of 6.6% – as the sector returns to growth, benefiting from continued economic uncertainty.

According to Mintel, total discounter sales in 2021 are expected to drop to £32.3bn for 2021, following a bumper 2020 when sales increased by 9.2% to hit £32.7bn.

Led by Aldi and Lidl, sales of food discounters alone are forecast to rise by 6.1% in 2022 to reach £22.5bn.

Overall, the food and non-food discount sector accounted for around 9.5% of all retail sales in the UK in 2020, although this is estimated to have dropped slightly to 9.1% in 2021.

Mintel’s research confirms that the pandemic has promoted even savvier shopping habits among Britain’s more affluent consumers, with 34% of higher-earning shoppers (household income of £50,000 and over) visiting discounters more since before the start of the Covid-19 outbreak.

Almost seven in ten (67%) of these ‘better-off’ discount shoppers said they find own-label luxury food ranges at food discounters to be as good as those at other supermarkets.

The study found that budget stores are also proving particularly popular among men aged 25-44, with over 42% saying they have increased their discount shopping since the start of the pandemic. This compares to an increase of just 22% of all discount shoppers. Meanwhile, it appears to be the freshly baked goods that are partly are attracting younger consumers to food discounters, with 42% of 16-24s buying these compared to 32% of over-65s.

“Despite concerns around their lack of e-commerce offering and potentially crowded stores, the discounters saw sales surge in pandemic-struck 2020,” said Piers Butel, Retail Analyst at Mintel,

“This growth was driven by a series of factors including leading discounters increasing the number of stores opened and the ongoing financial uncertainty driven by the pandemic. This uncertainty makes the value-proposition of the discounters even more tempting for consumers and, in particular, young families with extra mouths to feed, 99% of whom shopped at discounters, according to our research.

“As attitudes have shifted over the last few decades, we have seen men increasingly take part in the grocery shop. Despite this narrowing gap, there are still differences in how men approach the activity, with male shoppers generally preferring to spend less time in-store when shopping. The convenience and speed of the retail experience at discounters, with their smaller ranges and fast checkouts, are likely to particularly appeal to this demographic group.

“Looking ahead, the sector is set to leave the turbulent last 18 months behind with a spring in its step as continuing economic uncertainty and high inflation makes its straightforward, value-led proposition ever more tempting for consumers.”

NAM Implications:

• Economic uncertainty says it all.
• If you want 6% growth, then discounting is the route…
• Unless you can think of something better?