The European discount retail sector has shown continued growth, with the channel now accounting for 18% of the continental grocery market, according to new research from IGD. However, the food and grocery expert also predicts that growth in the sector is set to slow.
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The ten leading European discounters now boast a combined turnover of EUR94b, meaning that EUR1 of every EUR5.55 spent on groceries is spent at a discount outlet.
However, IGD predicts a slowdown of growth in 2010 as mainstream competitors respond to competition from discounters, the rate of discount store openings decreases and like-for-like sales growth fails to off-set this trend.
Ben Miller, international programme manager at IGD, predicted that discount retailers will account for 19.4% in 2010, but added that some slow-down in growth was inevitable.
“The sector experienced phenomenal growth after the introduction of the euro in 2002, and related consumer concerns about rising prices in the eurozone, but we now expect growth to slow to pre-2002 levels,” he commented.
“We are seeing a blurring of the traditional definitions of discount retail, as discounters recognise that to drive like-for-like growth they need to evolve and broaden their appeal, and as mainstream retailers adopt and adapt some of the tactics which have made discounters so successful.
“We will even see a spectrum of different approaches to discount trading, with some individual discount retailers flexing their operating model by market, and occasionally even within a single country.”
