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Discounters - UK - August 2010

  • The two most important factors in choosing a supermarket are convenience and price. Hard discounters can lead on the latter, but have to persuade consumers that they should be prepared to make a second trip to do their weekly shopping trip.
  • Hard discounters do not appeal just to the poorest members of society, they also attract savvy affluent consumers who know that some products are exceptional value for money.
  • Two thirds of all consumers use hard discounters at least occasionally. But there is a lack of enthusiasm for them. While two thirds of people shop there occasionally, only 41% think they offer good value for money.
  • Only 11% of consumers say they enjoy shopping at a hard discounter. Hard discounting is a compromise between low prices and low operating costs on the one hand and a pleasant shopping experience on the other. The hard discounters need to make more of the opportunistic non-food purchases to add excitement to their retail proposition.
  • 19% of consumers have not shopped or would never shop again at a hard discounter. They don’t like the downmarket feel of the stores or the lack of range and brands.
  • Nearly half of all consumers occasionally shop at the hard discounters. These shoppers split into two groups. Some use them simply because they are there and are convenient to use for top-up purchases. The rest come to cherry pick the offer for items that are exceptional value. The challenge for the hard discounter is to encourage these shoppers to spend more. But for both groups that would mean compromising the format – either adding more lines or seeking to improve the quality of products across the range.

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Table of contents

  1. Issues in the Market

      • Definitions
        • Abbreviations
        • Future Opportunities

          • Maintaining excitement – giving reasons to visit
            • Making a virtue of the format
            • Market in Brief

              • Hard discounters
                • Tough economic outlook, but should be good for discounters
                  • Hard discounters attract a broad range of savvy shoppers, not just the worst off
                    • Distinctive format
                      • What makes consumers choose a particular supermarket
                        • Hard discounters have some enthusiastic followers
                          • But overall consumers are unenthusiastic about them
                            • A small sector about to be hit by the disappearance of the third player
                            • Internal Market Environment

                              • Key points
                                • Who shops where?
                                  • Figure 1: Profile of supermarket shoppers, July 2009
                                • Survey sample problems
                                  • Figure 2: Profile of Supermarket shoppers, August 2007
                                • Implications
                                  • Hard discounter profile
                                    • Hard discounter usage
                                      • Figure 3: Hard discounter usage, 2003-10
                                      • Figure 4: Numbers shopping more from hard dsicounters, Jul 2008-Jun 2010
                                  • Broader Market Environment

                                    • Key points
                                      • Demographics
                                        • Figure 5: Trends in the age structure of the UK population, 2005-15
                                        • Figure 6: Forecast adult population trends, by socio-economic group, 2005-15
                                        • Figure 7: Forecast adult population trends, by lifestage, 2005-15
                                      • The Election
                                        • The deficit
                                          • Implications for consumers
                                            • Implications for discounters
                                            • Competitive Context

                                              • Key points
                                                • Consumer spending
                                                    • Figure 8: Spending on key retail categories, 2005-09
                                                • Strengths and Weaknesses

                                                  • Strengths
                                                    • Weaknesses
                                                    • Sector Size and Forecast

                                                      • Key points
                                                          • Figure 9: Hard discounters: estimated sales, 2004-09
                                                          • Figure 10: Hard discounters’ estimated share of all food retailers’ sales, 2004-09
                                                        • Netto
                                                          • Prospects
                                                            • The future for the hard discounters
                                                              • Forecast
                                                                • Figure 11: Hard discounters’ sales, 2005-15
                                                                • Figure 12: Hard discounters’ sales as % all food retailers’ sales, 2005-15 (f)
                                                            • Food Retailing – Channels of Distribution

                                                              • Where do people buy food?
                                                                  • Figure 13: Food retailing, by channel, 2009
                                                                  • Figure 14: Food retailing, by main channel, 2004-09
                                                              • Brand Communication and Promotion

                                                                • Key points
                                                                  • Advertising spend
                                                                    • Figure 15: Hard discounters, advertising spending, 2007-10 (May)
                                                                    • Figure 16: Hard discounters: Advertising spending as percentage of estimated sales, 2007-09
                                                                  • Non-foods
                                                                    • Figure 17: Advertising spending on non-foods as percentage of all advertising spending, 2007-10 (May)
                                                                  • Spending by media
                                                                    • Figure 18: Hard discounters: Advertising spending, by media, 2009
                                                                    • Figure 19: Food retailers: Advertising spending proportions by media, 2009
                                                                • Retailer Profiles

                                                                  • Aldi Stores Ltd (UK)
                                                                      • Figure 20: Aldi Stores Ltd (UK): Estimated financial performance, 2004-09
                                                                      • Figure 21: Aldi Stores Ltd (UK): Outlet data, 2004-09
                                                                    • Lidl (UK)
                                                                        • Figure 22: Lidl (UK): Estimated financial performance, 2004-09
                                                                        • Figure 23: Lidl (UK): Outlet data, 2004-09
                                                                      • Netto Foodstores Ltd
                                                                        • Asda
                                                                            • Figure 24: Netto Foodstores Ltd: Group financial performance, 2005-09
                                                                            • Figure 25: Netto Foodstores Ltd: Outlet data, 2005-09
                                                                        • What Drives Supermarket Choice?

                                                                          • Key points
                                                                            • What makes one choose a supermarket?
                                                                                • Figure 26: Factors considered for choice of a particular super market for main weekly shopping, May 2010
                                                                                • Figure 27: Key factors in choosing a supermarket, by age and affluence, May 2010
                                                                            • Who Uses Hard Discounters?

                                                                              • Key points
                                                                                  • Figure 28: Statements on discount food retailers, May 2010
                                                                                  • Figure 29: Key factors in choosing a supermarket, by age and affluence, May 2010
                                                                                • Use of discounters vs preferences in choosing a supermarket
                                                                                    • Figure 30: Statements on discount food retailers, by most popular factors considered for choice of a particular supermarket for main weekly shopping, May 2010
                                                                                    • Figure 31: Statements on discount food retailers, by next most popular factors considered for choice of a particular supermarket for main weekly shopping, May 2010
                                                                                • Attitudes towards Discounters

                                                                                  • Key points
                                                                                      • Figure 32: Statements on food discounters, May 2010
                                                                                    • Attitudes towards shopping at discounters by usage of hard discounters
                                                                                      • Occasional and regular users
                                                                                        • Non-users
                                                                                          • Figure 33: Statements on discount food retailers, by usage of food discounters, May 2010
                                                                                          • Figure 34: Statements on discount food retailers, by useage of food discounters, May 2010
                                                                                        • Attitudes towards hard discounters by what consumers look for in a supermarket
                                                                                          • Figure 35: Statements on food discounters by most popular factors considered, May 2010
                                                                                          • Figure 36: Statements on food discounters, by next most popular factors considered for choice of a particular super market for main weekly shopping, May 2010
                                                                                        • Implications
                                                                                          • Target groups
                                                                                            • Figure 37: Factors considered for choice of a particular supermarket for main weekly shopping, by target groups, May 2010
                                                                                            • Figure 38: Demographic profile of target groups, May 2010
                                                                                            • Figure 39: Statements on discount food retailers, by target groups, May 2010
                                                                                            • Figure 40: Statements on food discounters, by target groups, May 2010
                                                                                        • Appendix – Internal Market Environment

                                                                                            • Figure 41: Supermarkets used for main grocery shopping, by demographics, July 2009
                                                                                            • Figure 42: Usage of stores for top-up shopping, July 2009
                                                                                        • Appendix – Broader Market Environment

                                                                                          • Broader Market environment, background tables
                                                                                            • Figure 43: Trends in the age structure of the UK population, 2005-15
                                                                                            • Figure 44: Trends in the age structure of the UK population, by gender, 2005-15
                                                                                            • Figure 45: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
                                                                                            • Figure 46: GDP, PDI, consumer expenditure and savings, at constant 2010 prices, 2005-15
                                                                                        • Appendix – What Drives Supermarket Choice?

                                                                                            • Figure 47: Most popular factors considered for choice of a particular supermarket for main weekly shopping, by demographics, May 2010
                                                                                            • Figure 48: Next most popular factors considered for choice of a particular supermarket for main weekly shopping, by demographics, May 2010
                                                                                        • Appendix – Who Uses Hard Discounters?

                                                                                            • Figure 49: Statements on discount food retailers, by demographics, May 2010
                                                                                        • Appendix – Attitudes towards Discounters

                                                                                            • Figure 50: Most popular statements on food discounters, by demographics, May 2010
                                                                                            • Figure 51: Next most popular statements on food discounters, by demographics, May 2010
                                                                                            • Figure 52: Target groups, by demographics, May 2010

                                                                                        Companies Covered

                                                                                        • Aldi Stores Ltd (UK & Ireland)
                                                                                        • Asda Group Ltd
                                                                                        • British Market Research Bureau (BMRB)
                                                                                        • British Sky Broadcasting Group plc (BSkyB)
                                                                                        • Co-operative Group
                                                                                        • Costcutter Supermarkets Group
                                                                                        • Dansk Supermarked
                                                                                        • Government Actuary's Department (GAD)
                                                                                        • J. Sainsbury
                                                                                        • Kantar Media
                                                                                        • Kwik Save Ltd
                                                                                        • Lidl (UK)
                                                                                        • Londis (Holdings) Ltd - retail sales
                                                                                        • Marks & Spencer
                                                                                        • Netto Foodstores Ltd
                                                                                        • New Look Group Plc
                                                                                        • Northern Rock plc
                                                                                        • Office for National Statistics
                                                                                        • Office of Fair Trading
                                                                                        • Poundland Ltd
                                                                                        • Primark Stores Ltd
                                                                                        • Schwarz Group
                                                                                        • Spar UK Ltd
                                                                                        • Tesco Plc
                                                                                        • Virgin Media Ltd
                                                                                        • Waitrose
                                                                                        • Walmart Stores (USA)
                                                                                        • Wm Morrison Supermarkets

                                                                                        Discounters - UK - August 2010

                                                                                        £1,995.00 (Excl.Tax)