The march of hard discounters Aldi and Lidl continues to generate headlines, and this week was no exception when Kantar Worldpanel revealed Aldi had overtaken Waitrose for the first time to become the UK’s sixth biggest supermarket.
That means the success of their variety discounter counterparts can often be overlooked, despite equally impressive growth. B&M Bargains, for example, grew its sales by 66.5% to £1.3bn in the year to 29 March 2014. Poundland, meanwhile, grew its sales by 13.3% to £997.8m in the year to 30 March 2014.
So who are the shoppers fuelling this growth? What do they buy? And what can variety discounters do to encourage them to spend more?
This week, a new report from Him!, which quizzed shoppers at B&M, Home Bargains, 99p Stores, Poundland, Poundstretcher and Wilko, found 57% of UK adults claim to use variety discounters in a typical week. Some 53% are in the AB demographic - a huge increase on 37% a year ago.
“There has been a considerable shift in higher income households using variety discounters, just as we’ve seen them now using Aldi and Lidl regularly,” says Him! communications director Katie Littler. “Any stigma is slowly disappearing and they are becoming just another retailer, albeit trusted for a more limited range of missions and categories.”
Variety discount shoppers also tend to be young: 30% are under 34, versus 20% at Aldi and Lidl. Some 66% of 18 to 24-year-olds say they have visited a variety discounter.
Poundland has been especially successful in pulling in younger shoppers - 31% of those surveyed had visited a Poundland in the past week, up from 26% a year ago. This growth was not only driven by shoppers in the 25-34 age group, but also by more male shoppers - 44% of its shoppers are male, up from 37% a year ago.
The younger age of variety discount shoppers can be explained by the most popular shopper missions and categories - top-up (31%), and deal hunting (24%). But grocery is crucial. Some 57% of shoppers buy confectionery, 54% packaged grocery, 48% health & beauty, 40% household, 40% crisps & snacks, and 33% soft drinks. “The food and drink shoppers buy is much less about fresh and chilled, which have become the big footfall drivers for Aldi and Lidl,” says Littler.
As well as expanding fresh and chilled, variety discounters could also look at food to go, adds Littler - bought by only 8% of shoppers.
Average basket spend is also an issue. At just £8.93 it is the lowest for any channel in grocery - behind £11.81 in a c-store, £21.20 in a hard discounter and £31.30 in a supermarket.
Posher, younger and with a sweet tooth, loyal shoppers have been successfully pulled in by variety discounters. The key to continued growth will be getting those shoppers to splash more of their cash.
- 77% attracted by ‘cheap prices’
- 7.73 number of items bought per visit
- £8.93 average basket spend
- 33% visited a discounter once a week in the past month
- 31% top-up shopping is the most popular mission