Speaking at a seminar organised by the global retail team of WPP, Ethan Sinick of Management Ventures Europe said: “The only thing missing in the UK is a multi-format retailer with a hard discount format. We believe that will change in the next 18 to 24 months.”
Asked which retailer would make the move first, he said: “If any of the major multiples is going to do it, it would be Tesco. It owns a discount business in Japan and has discount concepts in Europe. I’d imagine one of the fundamental issues is whether to introduce it under the Tesco brand or another brand. My assumption is that it would have to be under another brand.”
Sinick warned that the threat posed by the hard discounters had been underestimated. “In the UK, the hard discount sector has double the amount of market share that market research agencies say it has. There is not a country in Europe where they’re not growing. We predict that the market will grow 10 to 15% a year in the next three years in this country.”
Although the multiples had pre-empted the threat to a certain degree, it would not be enough to prevent shoppers migrating to hard discount formats, he said. “The discounters are constantly redefining what quality you get at a certain price point.
“Retailers have to diversify their formats because as discounters grow, shopping modes fragment. They have to be multi-format.”