Discounters posing stiff competition to supermarket, convenience stores in the UK

RetailME Bureau

Discount retailers in the UK have opened stores at a swifter pace compared to supermarkets and convenience stores over the past five years.

According to Local Data Company (LDC) research, the five-year CAGR of discounters including Aldi, Lidl, Iceland, Poundland, 99p Stores, Poundstretcher, Poundworld, Home Bargains, B&M Bargains and Farmfoods was 8.2% between 2011-and-2015. That compared to the CAGR of supermarkets such as Tesco, Sainsbury’s, Asda, Morrisons and the Co-op was 6%. And the total number of convenience stores recorded CAGR of 7.6% during the five-year period.

The number of supermarkets has increased just 2.2% so far in 2015, while the number of convenience stores has risen by 4%. On the other hand, discount store openings risen 5.6% since the start of the year. However, over the five-year period, Tesco recorded the greatest increase in the number of stores, opening 1,104 new supermarkets and convenience shops since 2011. Asda too had the biggest percentage increase with its store numbers rocketing 77.3% from 282 to 500.

“This research clearly shows why the supermarket operators are struggling. This comes not only as a result of deflation and subdued consumer spends, but also a massive increase in competition both from outside but also within,” says LDC director Matthew Hopkinson.

“This is illustrated by the fact that the big four supermarkets opened more than 500 new stores since 2011 and while doing this also opened nearly 2,000 convenience stores. At the same time the discounters have increased their store numbers by nearly 1,400 and have a serious alternative to the big four supermarkets both on price and offer.”

“So the numbers are significant and reminiscent of a car crash in slow motion – and that’s before one includes the symbol groups and the rise of the M&S Simply Food and Waitrose/Little Waitrose, which this research has not included,” he adds.