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Food and Non-food Discounters - UK - September 2016

“Aldi and Lidl are continuing to take sales away from the grocery multiples by expanding their store estates and dispelling the perception that low prices means sacrificing on quality. But UK consumers struggle to differentiate between the two and this will need to change as they increasingly find themselves competing with each other.”

Thomas Slide, Retail Analyst

This report looks at the following areas:

  • Discount stores have shifted the perception of value
  • Food discounters tackle ethical perceptions
  • Will Steinhoff come to dominate non-food discounting?

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Table of contents

  1. Overview

    • What you need to know
      • Areas covered in this Report
        • What is a discounter?
        • Executive Summary

            • The market
              • Market size and forecast
                • Figure 1: All discounters’ sector size (£m excluding VAT), 2011-21
              • Low inflation holds down prices
                • Figure 2: Inflation rates compared to a year earlier, 2011-July 2016
              • Companies, brands and innovation
                • Food discounters dominate
                  • Figure 3: Market shares of the leading discounters, 2015
                • Advertising spend increases 31% in 2015
                  • Figure 4: Recorded above-the-line, online display and direct mail total advertising expenditure by the UK’s leading discounters, 2011-15
                • Lidl and Aldi most trusted discounters
                  • Figure 5: Attitudes towards and usage of selected brands, July 2016
                • New non-food discounter
                  • The consumer
                    • Poundland the most visited discounter
                      • Figure 6: Frequency of shopping at discounters, June 2016
                    • Fresh food the main purchase from food discounters
                      • Figure 7: What they buy from food discounters, June 2016
                    • Food popular at the non-food discounters
                      • Figure 8: What they buy from non-food discounters, June 2016
                    • Aldi customers more likely to be doing a main shop
                      • Figure 9: How they shop at food discounters, June 2016
                    • Impulsiveness is central to shopping at non-food discounters
                      • Figure 10: How they shop at non-food discounters, June 2016
                    • Discount shopping for pleasure
                      • Figure 11: Attitudes towards shopping at discounters, June 2016
                    • What we think
                    • Issues and Insights

                      • Discount stores have shifted the perception of value
                        • The facts
                          • The implications
                            • Food discounters tackle ethical perceptions
                              • The facts
                                • The implications
                                  • Will Steinhoff come to dominate non-food discounting?
                                    • The facts
                                      • The implications
                                      • The Market – What You Need to Know

                                        • Discount market growth slows
                                          • Aldi and Lidl alone again
                                            • Non-food discounting a dynamic sector
                                              • Brexit boost for discounters?
                                                • All food retailer’s sales flat
                                                  • Inflation holds down prices
                                                  • Market Drivers

                                                    • Consumer confidence
                                                      • Figure 12: Consumers’ view on their current and future financial situation, January 2013-July 2016
                                                    • Food retailers’ sales
                                                      • Figure 13: All food retailers’ sales, 2010-20
                                                    • Inflation
                                                      • Figure 14: Inflation rates compared to a year earlier, 2011-July 2016
                                                    • Growth in convenience retail
                                                      • Figure 15: Convenience store sector sales and forecast (including VAT), 2010-20
                                                    • Consumers lose faith in promotions
                                                      • Figure 16: Attitudes towards grocers’ pricing, August 2015
                                                  • Market Size and Forecast

                                                    • Market size
                                                      • Figure 17: Food and non-food discounters’ market size, 2011/12-2015/16
                                                    • The food discounters
                                                      • Figure 18: Food discounters’ market size, 2011-2015/16
                                                    • The non-food discounters
                                                      • Figure 19: Non-food discounters’ market size, 2011/12-2015/16
                                                      • Figure 20: The leading non-food discounters’ revenue, 2011-15
                                                    • The forecast
                                                      • Figure 21: All discounters’ sector size (£m excluding VAT), 2011-21
                                                      • Figure 22: Sales and forecast: All discounters, 2011-21
                                                    • Segmental analysis – Food discounters
                                                      • Figure 23: Food discounters’ sector size (£m excluding VAT), 2011-21
                                                      • Figure 24: Sales and forecast: Food discounters, 2011-21
                                                    • Segmental analysis – Non-food discounters
                                                      • Figure 25: Non-food discounters’ sector size (£m excluding VAT), 2011-21
                                                      • Figure 26: Sales and forecast: Non-food discounters, 2011-21
                                                    • The impact of the EU referendum vote
                                                      • Food discounters excelled following the recession
                                                        • Figure 27: Alternative market scenarios for the post-Brexit food-discount market, at current prices, 2016-21
                                                        • Figure 28: Detailed post-Brexit scenarios for the food-discount sector, at current prices, 2016-21
                                                      • Uncertainty could lead to renewed focus on price
                                                        • A faster impact than before
                                                          • Forecast methodology
                                                          • Companies and Brands – What You Need to Know

                                                            • Food discounters dominate
                                                              • Wilko drops down the rankings
                                                                • New UK clothing, homewares and groceries discounter
                                                                  • Advertising spend increases 31% in 2015
                                                                    • Lidl and Aldi most trusted discounters
                                                                      • Poundworld and Poundstretcher brands struggle
                                                                      • Key Players

                                                                          • Figure 29: Leading discounters’ sales, 2010/11-2015/16
                                                                          • Figure 30: Leading discounters’ operating profits, 2010/11-2015/16
                                                                          • Figure 31: Leading discounters’ operating margins, 2010/11-2015/16
                                                                          • Figure 32: Leading discounters’ outlet numbers, 2010/11-2015/16
                                                                          • Figure 33: Leading discounters’ sales per outlet, 2010/11-2015/16
                                                                      • Innovation and Launch Activity

                                                                        • New UK clothing, homewares and groceries discounter
                                                                          • Aldi pop-up wine shop
                                                                            • Discount food shop which sells everyday essentials for just 10p
                                                                              • EasyJet founder opens no-frills, discount food store
                                                                                • Liquidation retail store
                                                                                  • Well-known bargain basement retailer back from the dead
                                                                                    • Aldi to challenge Ikea with budget furniture range
                                                                                      • Cash and carry brand to roll-out value-led fascia
                                                                                      • Advertising and Marketing Activity

                                                                                        • Total advertising spend by the sector’s leading retailers up 31.2% in 2015
                                                                                          • Figure 34: Recorded above-the-line, online display and direct mail total advertising expenditure by the UK’s leading discounters, 2011-15
                                                                                        • Lidl and Aldi accounted for 93.5% of total sector ad spend in 2015
                                                                                          • Figure 35: Recorded above-the-line, online display and direct mail total advertising expenditure by leading UK discounters, 2011-15
                                                                                        • Advertising spend peaks around Easter and in the run-up to Christmas
                                                                                          • Figure 36: Recorded above-the-line, online display and direct mail total advertising expenditure by leading discounters, by month, 2015
                                                                                        • TV grabs the lion’s share of adspend
                                                                                          • Figure 37: Recorded above-the-line, online display and direct mail total advertising expenditure by the UK’s leading discounters, by media type, 2011-15
                                                                                        • A note on adspend
                                                                                        • Space Allocation Summary

                                                                                            • Food discounters – Summary
                                                                                              • Figure 38: Food discounters: Summary shelf frontage space allocation estimates, August 2016
                                                                                            • Food discounters – Detailed space allocation
                                                                                              • Figure 39: Food discounters: Detailed shelf frontage space allocation estimates, August 2016
                                                                                            • Multi-price non-food discounters – Summary
                                                                                              • Figure 40: Multi-price non-food discounters: Summary shelf frontage space allocation estimates, August 2016
                                                                                            • Multi-price non-food discounters – Detailed space allocation
                                                                                              • Figure 41: Multi-price non-food discounters: Detailed shelf frontage space allocation estimates, August 2016
                                                                                            • Fixed-price non-food discounters – Summary
                                                                                              • Figure 42: Fixed-price non-food discounters: Summary shelf frontage space allocation estimates, August 2016
                                                                                            • Fixed-price non-food discounters – Detailed space allocation
                                                                                              • Figure 43: Fixed-price non-food discounters: Detailed shelf frontage space allocation estimates, August 2016
                                                                                          • Retail Product Mix

                                                                                              • Figure 44: Leading discounters: estimated sales by product, 2015
                                                                                              • Figure 45: Leading discounters estimated sales mix, 2015
                                                                                              • Figure 46: Leading discounters, estimated sales per square metre, 2015
                                                                                          • Market Share

                                                                                            • Market share of the discount sector
                                                                                              • Figure 47: Market shares of the discount sector, 2013-15
                                                                                            • Market share of food-discounters
                                                                                              • Figure 48: Market shares of the food discount sector, 2013-15
                                                                                              • Figure 49: Markets shares in the food discount sector, 2006-15
                                                                                            • Market share of non-food discounters
                                                                                              • Figure 50: Market shares of the non-food discount sector, 2013-15
                                                                                          • Brand Research

                                                                                              • Brand map
                                                                                                • Figure 51: Attitudes towards and usage of selected brands, July 2016
                                                                                              • Key brand metrics
                                                                                                • Figure 52: Key metrics for selected brands, July 2016
                                                                                              • Aldi and Lidl enjoy a reputation for innovation
                                                                                                • Figure 53: Attitudes, by brand, July 2016
                                                                                              • Poundworld and Poundstretcher struggle to generate appeal
                                                                                                • Figure 54: Brand personality – Macro image, July 2016
                                                                                              • Food discounters are changing perceptions
                                                                                                • Figure 55: Brand personality – Micro image, July 2016
                                                                                              • Brand analysis
                                                                                                • Aldi still out in front when it comes to perception
                                                                                                  • Figure 56: User profile of Aldi, July 2016
                                                                                                • Lidl seen as more exciting and ethical than Aldi
                                                                                                  • Figure 57: User profile of Lidl, July 2016
                                                                                                • B&M offers a different kind of experience
                                                                                                  • Figure 58: User profile of B&M bargains, July 2016
                                                                                                • Poundland trades on its availability and accessibility
                                                                                                  • Figure 59: User profile of Poundland, July 2016
                                                                                                • Poundworld customers are unimpressed
                                                                                                  • Figure 60: User profile of Poundworld, July 2016
                                                                                                • Poundstretcher has little to offer
                                                                                                  • Figure 61: User profile of Poundstretcher, July 2016
                                                                                              • Aldi Stores Ltd (UK & Ireland)

                                                                                                  • What we think
                                                                                                    • Transformation
                                                                                                      • Step change?
                                                                                                        • Where next?
                                                                                                          • Background
                                                                                                            • Company performance
                                                                                                              • Figure 62: Aldi Stores Ltd (UK & Ireland): Group financial performance, 2010/11-2014/15
                                                                                                              • Figure 63: Aldi Stores Ltd: Outlet data, 2010/11-2014/15
                                                                                                            • Retail offering
                                                                                                            • Lidl (UK)

                                                                                                                • What we think
                                                                                                                  • Background
                                                                                                                    • Company performance
                                                                                                                      • Figure 64: Lidl (UK): Estimated group financial performance, 2010/11-2014/15
                                                                                                                      • Figure 65: Lidl (UK): Outlet data, 2010/11-2014/15
                                                                                                                    • Retail offering
                                                                                                                    • B&M Retail Ltd

                                                                                                                        • What we think
                                                                                                                          • Background
                                                                                                                            • Company performance
                                                                                                                              • Figure 66: B&M Retail Ltd: Group financial performance, 2010/11-2015/16
                                                                                                                              • Figure 67: B&M Retail Ltd: Outlet data, 2010/11-2015/16
                                                                                                                            • Retail offering
                                                                                                                            • TJ Morris Ltd (Home Bargains)

                                                                                                                                • What we think
                                                                                                                                  • Background
                                                                                                                                    • Company performance
                                                                                                                                      • Figure 68: TJ Morris Ltd: Group financial performance, 2011/12-2015/16
                                                                                                                                      • Figure 69: TJ Morris Ltd: Outlet data, 2011/12-2015/16
                                                                                                                                    • Retail offering
                                                                                                                                    • Poundland Ltd

                                                                                                                                        • What we think
                                                                                                                                          • Background
                                                                                                                                            • Company performance
                                                                                                                                              • Figure 70: Poundland Ltd: Group financial performance, 2011/12-2015/16
                                                                                                                                              • Figure 71: Poundland Ltd: Outlet data, 2011/12-2015/16
                                                                                                                                            • Retail offering
                                                                                                                                            • Poundstretcher

                                                                                                                                                • What we think
                                                                                                                                                  • Background
                                                                                                                                                    • Company performance
                                                                                                                                                      • Figure 72: Poundstretcher: Group financial performance, 2010/11-2014/15
                                                                                                                                                      • Figure 73: Poundstretcher: Outlet data, 2010/11-2014/15
                                                                                                                                                    • Retail offering
                                                                                                                                                    • Poundworld Retail Ltd

                                                                                                                                                        • What we think
                                                                                                                                                          • A better performance
                                                                                                                                                            • Turning point
                                                                                                                                                              • Where next?
                                                                                                                                                                • Background
                                                                                                                                                                  • Company performance
                                                                                                                                                                    • Figure 74: Poundworld Retail Ltd: Group financial performance, 2011/12-2015/16
                                                                                                                                                                    • Figure 75: Poundworld Retail Ltd: Outlet data, 2011/12-2015/16
                                                                                                                                                                  • Retail offering
                                                                                                                                                                  • Wilko Retail Ltd (formerly Wilkinson Hardware Stores Ltd)

                                                                                                                                                                      • What we think
                                                                                                                                                                        • Background
                                                                                                                                                                          • Company performance
                                                                                                                                                                            • Figure 76: Wilko Retails Ltd: Group financial performance, 2011/12-2015/16
                                                                                                                                                                            • Figure 77: Wilko Retails Ltd: Outlet data, 2011/12-2015/16
                                                                                                                                                                          • Retail offering
                                                                                                                                                                          • The Consumer – What You Need to Know

                                                                                                                                                                            • 83% have shopped at a discounter
                                                                                                                                                                              • 60% of Asda main grocery shoppers visit Aldi
                                                                                                                                                                                • Aldi attracts a higher level of spending
                                                                                                                                                                                  • Poundland attracts a lower average spend
                                                                                                                                                                                    • Food and drink most popular purchase
                                                                                                                                                                                      • Planned impulsivity
                                                                                                                                                                                        • Discounters match up on quality
                                                                                                                                                                                        • Where They Shop

                                                                                                                                                                                            • Poundland most visited discounter
                                                                                                                                                                                              • Figure 78: Frequency of shopping at discounters, June 2016
                                                                                                                                                                                            • Frequency of shopping
                                                                                                                                                                                              • Figure 79: How often those who shopped with each retailer in the past 3 months visited, June 2016
                                                                                                                                                                                            • Asda shares the largest proportion of its customers
                                                                                                                                                                                              • Figure 80: Food discounter visited in the last three months, by supermarket where they spend the most on groceries, June 2016
                                                                                                                                                                                              • Figure 81: Consumer attitudes towards retailers offering good value versus Asda quarterly LFL revenue, Q3 2012-Q2 2016
                                                                                                                                                                                            • Repertoire analysis
                                                                                                                                                                                              • Figure 82: Repertoire analysis of shopping at discount retailers, June 2016
                                                                                                                                                                                          • What They Spend

                                                                                                                                                                                            • Food discounter spent the most with
                                                                                                                                                                                              • Figure 83: Where they spend the most money (food discounters), June 2016
                                                                                                                                                                                            • Non-food discounter spent the most with
                                                                                                                                                                                                • Figure 84: Where they spend the most (non-food discounters), June 2016
                                                                                                                                                                                              • Average spend
                                                                                                                                                                                                • Figure 85: What they spend on an average shopping trip, June 2016
                                                                                                                                                                                              • 25-34-year-olds are the highest spenders at Aldi and Lidl
                                                                                                                                                                                                  • Figure 86: Average spend at the food discounters, by age and gender, June 2016
                                                                                                                                                                                              • What They Buy

                                                                                                                                                                                                • What they buy from food discounters
                                                                                                                                                                                                  • Figure 87: What they buy from food discounters, June 2016
                                                                                                                                                                                                  • Figure 88: What they buy from food discounters, by retailer, June 2016
                                                                                                                                                                                                • What they buy from non-food discounters
                                                                                                                                                                                                    • Figure 89: What they buy from non-food discounters, June 2016
                                                                                                                                                                                                    • Figure 90: What they buy from non-food discounters, by age and socio-economic group, June 2016
                                                                                                                                                                                                    • Figure 91: What they buy from non-food discounters, by retailer spent the most with, June 2016
                                                                                                                                                                                                • How They Shop at Discounters

                                                                                                                                                                                                    • Figure 92: How they shop at food discounters, June 2016
                                                                                                                                                                                                  • Lidl customers more likely to be used for pre-planned top-up shopping
                                                                                                                                                                                                    • Figure 93: How they shop at food discounters, by food discounter spent the most with, June 2016
                                                                                                                                                                                                  • Special events attract younger and more affluent customers
                                                                                                                                                                                                    • Figure 94: How they shop at food discounters, by average age and affluence, June 2016
                                                                                                                                                                                                  • Premium ranges and events most popular with Londoners
                                                                                                                                                                                                    • Figure 95: How they shop at food discounters, by region, June 2016
                                                                                                                                                                                                  • How they shop at non-food discounters
                                                                                                                                                                                                      • Figure 96: How they shop at non-food discounters, June 2016
                                                                                                                                                                                                      • Figure 97: How they shop at non-food discounters, by retailer used, June 2016
                                                                                                                                                                                                    • Brands and the discounters
                                                                                                                                                                                                        • Figure 98: How they shop at non-food discounters, by number of discounters used, June 2016
                                                                                                                                                                                                      • The young like to shop and compare online
                                                                                                                                                                                                        • Figure 99: How they shop at non-food discounters, by age and affluence, June 2016
                                                                                                                                                                                                    • Attitudes towards Shopping at Discounters

                                                                                                                                                                                                        • Figure 100: Attitudes towards shopping at discounters, June 2016
                                                                                                                                                                                                      • Are they really that much cheaper?
                                                                                                                                                                                                        • Figure 101: Attitudes towards shopping at discounters, by age and gender, June 2016
                                                                                                                                                                                                      • Speed and convenience
                                                                                                                                                                                                          • Figure 102: Attitudes towards shopping at discounters, by age and gender, June 2016
                                                                                                                                                                                                        • Discount shopper attitudes towards quality
                                                                                                                                                                                                          • Figure 103: Attitudes towards shopping at discounters, by age and gender, June 2016
                                                                                                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                        • Data sources
                                                                                                                                                                                                          • Consumer research methodology
                                                                                                                                                                                                            • VAT
                                                                                                                                                                                                              • Financial definitions
                                                                                                                                                                                                                • Abbreviations
                                                                                                                                                                                                                • Appendix – Market Size and Forecast

                                                                                                                                                                                                                  • Forecast methodology

                                                                                                                                                                                                                  Companies Covered

                                                                                                                                                                                                                  To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                  Food and Non-food Discounters - UK - September 2016

                                                                                                                                                                                                                  £1,995.00 (Excl.Tax)