The growth of discount retail is set to continue unabated, with global sales in the discount grocery sector on course to rise 65 per cent by 2012.

Total annual sales will reach US$390 billion (£221.34 billion) by 2012, up from the present US$237 billion (£134.51 billion), according to research from global retail analyst Planet Retail.

The report cites changes to planning regimes with regard to smaller footprint stores and shifts in shoppers’ mindset as reasons for the growth. However, the biggest sales driver will be the economic downturn, as cash-strapped shoppers seek bargains.

Discounters are diversifying to offer more sophisticated environments, ranges and packaging in order to mimic mainstream grocers, said Planet Retail.

Planet Retail global research director Bryan Roberts said: “Largely, there has been a real shift in how discounters are perceived in terms of the quality that is being offered and also in a trade-off between the store environment and low price advantage.”

German retailer Aldi will continue to be ranked as the number one discounter by sales, according to the report, but is likely to see its lead eroded by the Schwartz Group, which trades under the Lidl banner.

Europe remains the most important region for discounters, accounting for 10 per cent of the market. Discounting is also the main driver for retail expansion in the region, particularly in Western and Central Europe.

Germany remains the world’s most important discount market, followed by the US. Emerging markets, such as Africa and the Middle East, are estimated to double their penetration within the next five years.

Planet Retail forecasts that Aldi’s sales will rise from last year’s US$60 billion (£34.05 billion) to US$96 billion (£54.48 billion) by 2012, a 58 per cent increase.

Both Aldi and Lidl are enjoying robust growth. However, it is likely that Lidl’s performance over the period will prove stronger as it expands into the US, where Aldi already has a presence, said Roberts.

Schwartz’s sales are expected to rise 86 per cent by 2012 to US$93 billion (£52.78 billion).