The value of food discounters will increase by 96.3% over the next five years as price-weary shoppers flock to Aldi and Lidl, according to new research by IGD.
Estimating that UK food discounters, for the year ending April 2013, were valued at £9.5bn, the data claims that value will rise to £18.6bn by April 2018.
“We expect food discounters, like Aldi and Lidl, to continue to do well and build on recent stellar performance,” said Joanne Denney-Finch, chief executive of IGD.
“Nearly a third (32%) of shoppers tell us they will use food discounters more in the year ahead compared to almost a quarter (24%) in September 2010.”
“Nearly a third (32%) of shoppers tell us they will use food discounters more in the year ahead compared to almost a quarter (24%) in September 2010”
Joanne Denney-Finch, IGD
The stigma of food discounters offering inferior food quality is starting to fade away, according to Lidl.
A spokeswoman told The Grocer: “More and more shoppers are turning to Lidl for their weekly shop when they discover the huge savings that they can make without compromising on quality.
“Our focus has always been on providing premium quality products at low prices, and this value for money message has really resonated with UK consumers, not least, as IGD’s report finds, with ABC1 demographic groups.”
However, the growth of Aldi and Lidl must not overshadow the growth of independent retailers, according to James Russell, commercial director at specialist discount wholesaler Rowan.
Rowan delivered pre-tax profits in 2012 of £3.6m – a jump of 12% compared to the previous year – and Russell believes that growth opportunities for independent food retailers are on the rise.
He explained: “While Aldi and Lidl will continue to grow, there is a huge number of independent discounters that will also see growth – ranging from locally owned chains to market stalls, numbering in the thousands.
“For example, in terms of total number of stores, Aldi and Lidl probably account for less than 14% of the industry – a true insight into the real opportunity for growth for discount retailers across the board.”
IGD estimated that the UK food and grocery market would be worth £206bn by 2018, an increase of more than a fifth from its present value of £170bn. Online sales were expected to grow 123.7% to £14.6bn in the same period.