Massive opportunities for discounters throughout the UK
Discount supermarkets have historically been regarded as only attractive to cash-strapped shoppers but new research from site location specialist CACI shows they are attracting a broader mix of shoppers and have a massive opportunity to successfully open hundreds of stores throughout the UK.
By Glynn Davis
Its annual ProVision report on the grocery market suggests that the discounters could open almost 1,000 new stores having identified many suitable locations that would support their offers.
Paul Langston, associate director of location strategy at CACI, says: “Discounters have huge opportunities – they have a wider profile, they are lower cost operators, have a small store model and we are in a downturn. They are pushing into new areas and Tesco is right to have responded
What makes this large number of additional stores a possibility is the fact that CACI found the existing discounter outlets were attracting a very broad mix of shoppers. Although Langston says 20 per cent of shoppers doing their main shop in the stores of Aldi, Lidl and Netto are classified as ‘struggling families’ there are also 17 per cent who fall into the more affluent ‘secure families’ category. There are also a fair number of ‘settled suburbia’ shoppers. This all contributes to the discounters attracting a much more representative mix of shoppers than many people had previously thought.
The report came to the same conclusions when it looked at top-up shoppers frequenting discounter stores. “Even some of the most affluent shoppers are already using Aldi and Lidl if they are within the catchment area. ‘Secure families’ are the most over-represented if they are in the catchment,” says Langston.
He suggests that London offers particularly “rich pickings”, which is why Aldi has declared its intention to add 250 stores in the area, and Lidl has been testing its Express format in Edmonton, north London.
However, Langston says the capital is not the only area that is ripe for the discounters’ expansion as there are many much smaller towns throughout the UK that offer the right mix of shoppers for the discount proposition – including some surprises such as the more upmarket locations of Horsham, Hove and St Albans.
Although Asda and Morrisons are currently on the front line fighting the discounters’ advances, because many of their stores are located within the same areas, Langston says they are used to the discount threat. This is why he suggests the potential biggest losers from a massive advance of Lidl, Netto and Aldi would be Sainsbury’s and Tesco.
The report found 50 per cent of Sainsbury’s sales are derived from areas where the discounters could open stores, which possibly threatens up to �11 billion of the grocer’s sales. “This is a new challenge to Sainsbury’s…it makes the ‘feed the family for a fiver’ marketing look weak,” suggests Langston.
Tesco has some �20 billion of sales at potential risk from discounter stores if they can secure units in the areas highlighted by the ProVision report, which is why the company has introduced its new Discounter range and invested heavily in marketing its value credentials.
“With an increasingly broad appeal across all demographic groups and with shoppers growing more value-conscious as the credit crunch deepens larger swathes of the country are becoming target territory. The discounters are already moving into the mainstream and as they expand rapidly their appeal is set to widen,” predicts Langston.
glynnd@theretailbulletin.com
