Think discount, retailers urged
some other European countries - notably Germany - but British
retailers should not underestimate the power of low-price formats,
especially in international markets, claims retail think tank IGD.
Since the early 1990s, discount store numbers across Europe have doubled to 30,000, according to Joanne Denney-Finch, chief executive of the IGD speaking at the organisation's annual global conference today.
But discounting is more than just a European phenomenon, it is now truly global, with the US and Japan boasting successful low-cost chains and showing that the format can work in a variety of markets, no matter what the level of consumer spending power. In Europe, Lidl has been the pioneer, increasing its store numbers from less than 1,000 in 1991 to 5,000 today. This has been helped by the planning regimes in many European countries, which favour the expansion of smaller stores, and Lidl has entered one new market a year over the last decade to take advantage of this liberal attitude.
Like-for-like sales growth has also been impressive. For example, Aldi's sales have grown by over 25 per cent during the past five years, driven by range adaptation and the increase in consumer price awareness due to poor economic conditions in continental Europe and the introduction of the euro.
Other companies in less traditionally discount-focused nations are also turning to the discount format. The likes of Carrefour and Casino in France, for example, have seen particularly good performances from their discount fascias as their larger stores have suffered from a downturn in consumer spending), and retailers looking to expand beyond their traditional boundaries should consider the discount format as a viable alternative to hypermarkets or convenience stores, the IGD suggests.
"These low price formats have seen a runaway success across continental Europe, the US and even Japan," said Denney-Finch. "We have seen a dramatic change worldwide, as the discounters move away from their core lines. In Europe, they have gone from a focus on dry goods to stocking fresh meat and produce, ready meals and healthy eating alternatives, really helping to broaden their consumer appeal."
She continued: "The discounters' combination of low price and convenience is clearly proving irresistible and we anticipate this will fuel their continued growth. They are overcoming their traditional weaknesses that limit their appeal and which meant shoppers have to shop elsewhere to get all their shopping needs. They now list key brands, are increasing their marketing emphasis and are introducing customer service initiatives, such as debit cards and longer opening hours.
"With range adaptation and own label improvements, hard discounters are now able to cater for the full weekly shopping trip and if discounters succeed in switching from a top-up, to a main weekly shop destination there is a big challenge ahead."
