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Viewing report
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Discount Retailing Market Report
Key Note Publications Ltd, Jan 2001
The UK market for discount retailing continues to grow strongly, recording high levels of growth over the previous 12 months to 2001. Growth for this market is higher than that for the UK retail industry as a whole, yet still represents less than 1% of the total, at an estimated £1.49bn in 2000.
Many companies in the discount retailing market are following a strategy of expansion. This development can be seen in both the increased number of store openings and in the movement into overseas markets by several companies. However, care must be taken with regard to how such strategies are handled, developed and communicated, as they could increase the profile of a company to the point that it might converge too closely with the supermarket chains.
The market, heavily influenced by business models imported from the Continent and the US, is segmented into two main areas - discount grocery retailers and discount non-grocery retailers. Grocery companies, generally characterised by their `no frills' approach and town centre locations, make up the slowest area of growth within the market. Despite brave efforts of the companies involved, convergence with the large supermarkets is beginning to have an impact on sales, as the differences between true discounters and `price-warring' supermarkets becomes increasingly ambiguous to consumers.
The non-grocery sector of the market continues to grow very rapidly, fuelled by growth in the number of factory outlet centres and increased store openings from nearly all companies active in the market. These stores are not converging with supermarkets at the same pace as the grocery discounters, and shopping at such out-of-town outlet centres is a totally different shopping experience. Not only is the experience new, but it brings within the reach of the discounters a new type of customer, who perhaps does not fit the stereotypical less-affluent consumer profile. Attracting and keeping these customers is a key challenge for discount clothing retailers.
In the wake of the terrorist attacks in the US on 11th September 2001 and the subsequent US counter-strikes in Afganistan, the immediate future is less certain, with growth expected to slow slightly in 2001. However, this slowdown is only thought to be temporary, as wary consumers choose not to spend unnecessarily in an uncertain climate. Longer-term forecasts for the discount retailing market remain strong, particularly for the non-grocery sector.
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