For a while the discounters thought their time had come – but now the sector has reverted to type, says Ed Garner

The future was looking oh so rosy for the discounters at the end of 2008.

Food price inflation was running at over 9% per annum, with some markets, notably bread, eggs and dairy, showing headline-grabbing rates of over 30%. 'Recession chic' was taking hold with programmes and articles extolling 'forgotten cuts' and nostalgic wartime recipes.

It would be an understatement to say price had raced up the agenda and attention turned to how you could save money, not only by switching products but also by switching to a cheaper shop. In this environment Aldi, Lidl and Netto could be forgiven for proudly proclaiming that "this is our time".

The media ran numerous variations on the 'flocking to the discounters' stories and for a while this was the case,­ a number enjoying double-digit growth ­ and for one period [12w/e 28 December 2008] Aldi posted a recordbreaking 25.7% per annum growth rate.

In addition to the media spotlight, discounter growth was fuelled by the collapse of Kwik Save, which not only made sites available but also created a large group of shoppers seeking a replacement discounter.

This heady growth even led to Aldi announcing aggressive growth plans of store openings every week for the foreseeable future.

What a difference a year makes. Move forward to the end of 2009, and our measure of food price inflation had dropped to below 3% (continuing to fall to 1.4% for 12w/e 18 April 2010). And there was a sea change in the national mood, with shoppers deciding to enjoy Christmas and, to a degree, putting the gloom of the recession behind them. Food is meant to be enjoyable, after all, and many households were better off thanks to lower interest rates (assuming they still had a job). Premium own label had moved back into growth, with Tesco Finest seeing very robust double-digit growth over Christmas. Not only that, Waitrose had become the country's fastest-growing grocer.

The tide had gone out for the discounters and the sector growth slumped to below 4% and, since this was behind the market growth, there was a loss of share as well. What was behind this?

An aggressive fightback from other retailers for a start. Tesco launched its discount range at the end of 2008 and proclaimed itself the nation's biggest discounter. And Asda, firmly established with a rock-solid low-price reputation, was actually consistently stealing business back from Aldi, Lidl and Netto.

The limited choice was now making the typical discounters appear a rather Soviet experience. And the high level of 'alien' own labels was in contrast to brands now growing faster than own label. Furthermore, the weakness of sterling against the euro was likely to subdue any bullish plans. Throughout, the sector has remained stuck at about a 6% share of GB grocery with many of the discounter gains merely mopping up the Kwik Save remnants.

What now? The latest Kantar figures published this week show an interesting split, with Lidl and Netto trailing the market and losing share, whereas Aldi has put on a growth spurt and lifted share on the back of strong produce and alcohol sales and a new TV campaign.

We are no longer "flocking" as we were in 2008 but, for some shoppers at least, the discounters are here to stay.

Ed Garner is communications director of Kantar Wordpanel.