Value retailers’ popularity now perennial

Retail Insider and K3 Retail bring you a monthly column taking a look at some of the most pertinent and interesting topics of the day in the big wide world of retail.

Value retailers’ popularity now perennial

A few years back at the start of the recession Sir Terry Leahy suggested the discount retailers were enjoying their day in the sun and that the big supermarkets would inevitably regain the high ground when the economy improved.

Fast forward to today and the likes of Aldi, Lidl and Poundland are still enjoying the sun’s warming rays while Leahy is now chairman of discount business B&M Bargains.

In reality the discount sector had been very cyclical. When good times returned after tough periods the value end of the market was ultimately abandoned as shoppers returned to the premium retailers.

But this time things are very different. Rather than lose shoppers to the full price players Poundland CEO Jim McCarthy reckons that as disposable incomes have risen in recent years consumers have actually been spending more in his stores.

Yes, these shoppers remain attracted to bargains. But what has undoubtedly changed across the discounting landscape is a different approach to retailing. These value retailers have adopted better in-store practices – with improved merchandising and customer service.

The range of branded products has also increased as the manufacturers have recognised that this is a true growth area of the retail sector. There has also been a general improvement in the quality of the products on offer.

Customers have become aware that Aldi and Lidl are not flogging inferior goods on the cheap – they are instead offering high quality products that are increasingly beating (in blind tastings) the equivalent lines available in the major supermarkets.

Hence the likes of Poundland, Aldi, Lidl and B&M are going hell for leather with their store openings. The Poundland acquisition of 99p Stores typifies the confidence they now have in their model.

Meanwhile the major supermarkets and many other merchants across various categories are doing the complete opposite – closing outlets.

This truly in a fundamental shift in the retail order of things and suggests the value players better keep plenty of sun cream to hand. The good times roll on…

Glynn Davis, editor, Retail Insider

K3 Retail deliver multi-channel solutions that enable retailers to create joined up shopping experiences for their customers whether they choose to buy on-line, direct, in-store or via mobile. It has over 20 years’ experience delivering award winning solutions, to more than 175 internationally recognised retail brands.