Discount supermarkets are facing a slowdown in growth as competition from more mainstream competitors and brands start to impact on their sales.
According to researcher Planet Retail, discounters are now losing ground in countries such as Germany and the UK due to increasingly “savvy competition” from their mainstream competitors.
Planet Retail’s research director Matthias Queck said: “Rising popularity of discount oriented models has only partly benefited the discounters. With all retailers focusing on efficiency and price now, introducing some of the discounters’ very own key elements, discounters are being faced with increased competition from all formats.”
Discounters had represented one of the fastest growing areas of retail in recent years but research suggests this will slow. Factors leading to this include; saturation in some mature markets, price and private label strategies from mainstream grocers and more innovative and aggressive strategies from branded manufacturers to fend off the private label offensive from discount chains.
According to market share data from Kantar Worldpanel – formerly TNS Worldpanel – Aldi and Lidl in the UK lost market share in the 12 weeks to January 24 while Tesco grew share helped by its double Clubcard points promotion.
Planet Retail points out however that although growth for the discounters may lose momentum they will continue to outperform the grocery market as a whole with sales expected to hit $460bn (£293bn) in five years’ time.