With a thriving discount sector and collapsed competitor, discounters are expanding into the grocery market, raising questions on potential impacts.
- Poundland, Home Bargains, B&M and Poundstretcher make significant moves into grocery, including chilled and fresh categories.
- Experts believe this push is driven by food’s role as a shopper magnet and price edge.
- The cost-of-living crisis amplifies demand for budget-friendly groceries, benefiting discounters.
- Supermarkets respond with defensive strategies such as price matching to mitigate the threat posed by discounters.
The financial strain on UK households has opened a window of opportunity for discounters like Poundland and B&M to expand into the competitive grocery market. Analysts at Global Data note that these retailers are leveraging food as a key drawcard to boost store visits and enhance their pricing strategy. The expansion into categories such as fresh and chilled foods is aimed at broadening their appeal to cover various dining needs and customer missions.
Home Bargains, alongside other discounters, has begun to elevate its grocery offerings, now including fresh bakery items. This progression illustrates a clear ambition to capture a larger share of the grocery sector by providing a wide range of competitively priced goods. A spokesperson for Home Bargains highlighted that the introduction of in-store bakeries in numerous outlets aligns with the growing UK market for fresh bakery products, and further rollout is planned.
Retail Director at Poundland, Darren Kay, emphasised the strategic enlargement of their product range to meet customer demand for comprehensive shopping solutions. This includes fresh meats, fish, and the extension of frozen and chilled foods across a majority of its stores. Such efforts not only aim to solidify their position in the grocery sector but also increase competition with established supermarkets.
The cost-of-living crisis has undeniably shifted shopper preferences towards more economical options provided by discounters. As noted by IGD’s Bryan Roberts and Kantar’s Sophie Carroll, shoppers are increasingly recognising the value offered by these stores—low prices and impactful deals on a breadth of products enhancing customer frequency and basket size. Discounters’ ability to offer budget-friendly grocery solutions appears compelling amid economic constraints.
Traditional supermarkets like Asda have started adopting strategic measures to counter the rise of discounters. Initiatives such as price matching and highlighting unique advantages like product range and loyalty rewards are employed to retain customer loyalty. However, some experts warn that excessive price matching could inadvertently highlight the competitiveness of discounters, potentially affecting perceived quality at established stores.
The expansion of discounters into the grocery market is reshaping the retail landscape, compelling traditional retailers to innovate and adapt.
