Why has it taken so long for Discount food retail to make an impact in the UK?
Analysts who believed the retail press when Aldi and Lidl entered the UK market in 1990 that they would sweep all in front of them away, often ask me this question.
The truth is the discounters had an impact much quicker than is generally understood! The impact on the market came from the reaction of the largest players. The market leaders saw the signals of what was to come and reacted quickly to restrict the growth potential!
Knowing it would take these discounters time to build volumes needed for successful private label brands they put their own muscle behind inventing a discount range and putting it in store as quickly as the discounters could manage it themselves. This lowered profit margins but with sales growth still available, the best of the food retailers covered their tracks with profit growth from expansion.
Meanwhile these large supermarket operators streamlined their costs with improved processes and squeezed their suppliers a little harder than before. In fact ask a major branded supplier about the impact discounters had on the market and he will probably not smile!
Meanwhile the discounters themselves just chewed through the years to build up there store numbers, product reputations and teams. There is still a long way to go for the format to be mature, but my guess is 3000 stores and 10% market share will arrive in the future for the two famous facia.