With the imminent return of Netto to the UK, we are soon to be graced with another value-focused retailer.
With the imminent return of Netto to the UK, we are soon to be graced with another value-focused retailer, bringing the total of what would traditionally have been considered a hard discounter to three.
As they take the fresh food fight to the grocers the lines between the two are blurred, more so in the consumer’s eyes than the industry’s, bringing them firmly into the mainstream.
The developments in fresh food that we have seen in-store from Aldi and Lidl - bakeries, better meat and fish ranges, and a strong produce offer - have been part of a shift that these retailers have made in order to adapt to the UK consumer. And it has been a vital part of their ability to steal share from the established players.
This fresh food offer has made a trip to a discounter far more convenient for the less affluent shopper, meaning they needn’t visit multiple stores to pick up the essentials. Furthermore, these trips have become less of a novelty and more part of regular shopping habits.
And the benefits of a strong fresh offer are clear to see. According to Verdict’s 2014 How Britain Shops survey, the proportion of shoppers who use Aldi and Lidl because of product quality is 29.3% and 26.0% respectively, versus the industry average of 17.3%.
This is impressive and while Waitrose is well in front (50.4%) only Sainsbury’s comes close (27.5%). On top of that, the market share gains enjoyed by the two have been significant and while they can’t just be attributed to improvements in fresh, it has certainly helped.
The share that has been stolen from the traditional grocers is going to be tough to recoup. While consumer spending is returning to a more normal, pre-downturn pattern across other sectors such as clothing and homewares, grocery is going to be one area where spending habits are unlikely to revert.
The rise of the discounters will have a profound impact on the old guard, not only because they have been able to adapt in order to progress but because, in the eyes of the shopper, the discounters are less different than ever before.
- Andrew Stevens is a senior analyst at Verdict