Prepared by Planet Retail | April 2005
THE UK DISCOUNT SECTOR – TRENDS & IMPLICATIONS
THE UK DISCOUNT SECTOR – TRENDS & IMPLICATIONS
2004-012
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West European Outlet Trends
2004-013
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Discount Stores
Number of discount stores in Europe by country, 2004 (% of total)
Germany43%France
10%Spain10%
UK4%
Italy5%
Norway5%
Others23%
Denmark4%
France4%
Norway5%
UK8%
Others14%
Germany65%
Number of discount stores in Europe by country, 1992 (% of total)
3
The UK has seen its status as a discount market increase in recent years
2004-014
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Channel Development for Key Grocery Formats, 2004-2009 – Number of Outlets (W Euro)
25,359
6,455
1,604
59,795
31,328
64,432
27,041
65,047
1,752
36,545
63,399
7,160
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Hypermarkets &superstores
Supermarkets &Neighbourhood
stores
Discount stores C-stores &Forecourts
Cash & carriesand warehouse
clubs
Drugstores &pharmacies
Nu
mber
of
Ou
tlets
2004 2009Growth will continue over the next five years
4
2004-015
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100
120
140
160
180
200
1999 2004 2008
181.8 Convenience & forecourt stores
179.9 Cash & carries
173.4 Hypermarkets & superstores
151.5 Supermarkets & neighbourhood stores
186.6 Discount Stores
European Market Developments by Channel, Leading Retailers (indices)
Leading retailers are planning to grow discount formats faster than others
5
2004-016
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Discount StoresDiscount store numbers in Europe, 1992 - 2008 (no. of stores)
Discount StoresDiscount store numbers in Europe, 1992 - 2008 (no. of stores)
14,434
32,560
39,362
0
10,000
20,000
30,000
40,000
50,000
1992 2004 2008
The European discount channel will continue to see growth in store numbers…
6
2004-017
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Discount SalesDiscount Store Sales in Europe, 1992-2008 (EUR mn; incl. sales tax)
Discount SalesDiscount Store Sales in Europe, 1992-2008 (EUR mn; incl. sales tax)
42,826
109,624
137,743
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
1992 2004 2008
…with sales to approach EUR140 billion…
7
2004-018
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Discount ShareDiscount Store Market Shares in Europe, 1992-2008 (% of modern grocery distribution sales)
Discount ShareDiscount Store Market Shares in Europe, 1992-2008 (% of modern grocery distribution sales)
7.0%
10.0%
10.8%
0%
2%
4%
6%
8%
10%
12%
1992 2004 2008
…and market share set to hit 11%.
8
2004-019
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Number of New Stores, 2004-2009Discount Stores
-400 -200 0 200 400 600 800 1,000 1,200 1,400
Norway
Luxembourg
Iceland
Netherlands
Ireland
Switzerland
Portugal
Belgium
Denmark
UK
Finland
Greece
Sweden
Austria
Italy
Spain
France
Germany
The UK will continue to see reasonable discount channel growth, although it will be outpaced by more discount-centric markets.
9
2004-0110
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Discount StoresDiscount Stores
No. of discount stores in Europe by country (no. of stores, 2004)
5
8
10
29
3240
46
71
75
88
153
392
395
425
429548
575
605
614
970
985
1,271
1,333
1,6301,711
3,331
3,385
SI
RU
LU
SK
LV
UA
RO
LT
IE
EE
SE
CZ
GR
FI
HU
CH
PT
NL
BE
AT
DK
PL
UK
IT
NO
FR
ES
DE 14,407
Although it is home to a reasonable number of discount stores, the UK lags other markets by a massive margin.
10
2004-0111
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Discount StoresDiscount Stores
Food market share of discounters in Europe, 2004 (discounters’ food sales as % of modern grocery distribution, grocery sales)
35.1
27.6
18.8
15.8
14.1
12.5
9.88.9 8.5 8.4
7.77.2
6.5 6.2 6.15.2
3.7 3.5 3.3 3.2 2.92.4 2.3
1.3 1.3 0.8 0.4 0.3 0.1
NO DE AT DK EE HU PT BE ES CZ AV. LT NL FR PL GR IT UK CH LU FI IE RO SE UA LV SK SI RU
Due to slow growth and low consumer enthusiasm for discount stores, market share has remained lower than average in the UK.
11
2004-0112
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Discounting in the UKKey Trends & Major Players
12
2004-0113
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Key Trends
Hard discounting has been slow to take off in the UK, as mainstream grocery retailers have introduced economy private label ranges (benchmarked in price against the discounters)
The British shopper has been reticent in exploiting the discount channel, preferring instead the tidier supermarkets with their well-known brands
Consumer acceptance of discounters will increase over time
Immigration – from Eastern & Central Europe in particular – will drive traffic within the hard discount channel
Manufacturers are slowly being impacted by the channel as its key players demand shelf-ready or pallet-mounted product
13
2004-0114
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Key Trends
Soft discounter Kwik Save is set to continue its decline. Post-merger problems and ongoing portfolio rationalisation have seen it significantly shrink
Aldi and Netto are set for dramatic growth, actively seeking out hundreds of new stores between them
Future growth will focus on regions such as Scotland, Wales and Northern England
The growth of discounters will see product mix shift from brands towards private label products
14
2004-0115
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Growth Trends – Store Numbers
Discount Store Numbers, 1999-2009
1,313 1,3471,382 1,408 1,374
1,280 1,3251,375
1,4401,500
1,565
0
200
400
600
800
1,000
1,200
1,400
1,600
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Store numbers to resume upward trend after Kwik Save slimming is complete
15
2004-0116
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Growth Trends – Total Sales Area
Discount Store Sales Area (‘000 m2), 1999-2009
983 992
1,046 1,069 1,043983 1,025
1,0731,136
1,1851,237
0
200
400
600
800
1,000
1,200
1,400
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Similarly, sales area will resume upward progress as rivals take up Kwik Save slack
16
2004-0117
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Growth Trends – Average Sales Area
Discount Store Average Sales Area (m2), 1999-2009
749
736
757 759 759
768773
780
789 790 791
700
710
720
730
740
750
760
770
780
790
800
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Average store size will increase to extend product offers and improve the instore environment
17
2004-0118
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Growth Trends – Retail Banner Sales
Discount Store Retail Banner Sales (GBP mn), 1999-2009
4,323 4,249
4,636 4,7264,872
4,675 4,691
5,1035,454
5,8346,253
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Retail sales through the discount channel are poised to exceed GBP6 billion by 2009.
18
2004-0119
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Growth Trends – Market Share
Discount Store Market Share (%), 1999-2005
5.61
4.95
5.07
4.94
4.76
4.64
4.31
4
4.2
4.4
4.6
4.8
5
5.2
5.4
5.6
5.8
6
1999 2000 2001 2002 2003 2004 2005
Slow growth and Kwik Save downsizing has seen sectoral market share slide
19
2004-0120
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755
235200
123
0
100
200
300
400
500
600
700
800
Kwik Save Aldi Lidl Netto
Leading Players - 1999
Leading Discounters by Stores, 1999
Kwik Save ended the 1990s with a clear advantage over its German/Scandinavian rivals.
20
2004-0121
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Leading Players - 2004
Leading Discounters by Stores, 2004
By 2004, Lidl had overtaken Aldi and had closed the gap on the shrinking Kwik Save.
21
520
330290
140
0
100
200
300
400
500
600
Kwik Save Lidl Aldi Netto
2004-0122
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470455
380
260
0
50
100
150
200
250
300
350
400
450
500
Aldi Kwik Save Lidl Netto
Leading Players - 2009
Leading Discounters by Stores, 2009
Growth plans suggest that Aldi will take top spot in outlet numbers by 2009.
22
2004-0123
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2,218
890
738
477
0
500
1,000
1,500
2,000
2,500
Kwik Save Aldi Lidl Netto
Leading Players - 1999
Leading Discounters by Sales (GBP mn), 1999
Kwik Save enjoyed clear market leadership in 1999.
23
2004-0124
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Leading Players - 2004
Leading Discounters by Sales (GBP mn), 2004
By 2004, Lidl had leapfrogged Aldi.
24
2,218
890738
477
0
500
1,000
1,500
2,000
2,500
Kwik Save Aldi Lidl Netto
2004-0125
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1,906
1,735
1,545
1,067
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Aldi Lidl Kwik Save Netto
Leading Players - 2009
Leading Discounters by Sales (GBP mn), 2009
Aldi is on track for sector leadership.
25
2004-0126
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1.161.09
0.96
1.31
2.88
1.36
0.62
0.95
0
0.5
1
1.5
2
2.5
3
Aldi Lidl Kwik Save Netto
1999 2005
Leading Players
Top Discounters by Market Share, 2005 (% of MGD grocery sales)
26
2004-0127
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Leading Players – Kwik Save
Website: www.kwiksave.co.uk
Retail sales, 2004: GBP1,748 million
No. of stores, 2004: 520
Average sales area: 738 sq. m.
Five-year growth rates, 2000/04
No. of stores: -29.2%
Retail banner sales: -11.5%
Market share 2004: 1.73%
27
2004-0128
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Leading Players – Kwik Save
28
2004-0129
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Leading Players – Lidl
Website: www.lidl.co.uk
Retail sales, 2004: GBP1,311 million
No. of stores, 2004: 330
Average sales area: 837 sq. m.
Five-year growth rates, 2000/04
No. of stores: 32.0%
Retail banner sales: 48.5%
Market share 2004: 1.30%
29
2004-0130
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Leading Players – Lidl
30
2004-0131
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Leading Players – Aldi
Website: www.aldi-stores.co.uk
Retail sales, 2004: GBP1,080 million
No. of stores, 2004: 290
Average sales area: 800 sq. m.
Five-year growth rates, 2000/04
No. of stores: 20.8%
Retail banner sales: 18.7%
Market share 2004: 1.07%
31
2004-0132
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Leading Players – Aldi
32
2004-0133
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Leading Players – Netto
Website: www.netto.co.uk
Retail sales, 2004: GBP536 million
No. of stores, 2004: 140
Average sales area: 650 sq. m.
Five-year growth rates, 2000/04
No. of stores: 13.8%
Retail banner sales: 11.4%
Market share 2004: 0.53%
33
2004-0134
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Leading Players – Netto
34