The Rise of Discount Supermarkets in the UK

Economic factors have brought about change in how consumers think about shopping and where they make purchases. The financial crisis brought changes to many UK families and the price awareness increased. Groceries, especially food, is a large share of a family budget, so naturally consumers are motivated to search for cheaper alternatives. Price and quality hangs together, but it seems like the discounters have proven to the consumers that the relationship does not necessarily need to be as defined by “the big four”. The lower prices are easy to document.

A consumer organization made a test based on 19 common items and found prices varying from 52.59 GBP in M&S down to 33.61 GBP in LIDL corresponding to 36%. Quality is subjective and therefore not so straightforward to test. The look and feel of the product is one thing, but taste is obviously very important. The video shows two families concluding that the quality of products bought in LIDL and ALDI is acceptable, and they are open to change. The increase in market share of the two companies confirms that more and more consumers are changing.

In January 2017, the two discounters had a market share of 10.7% and in April 2021 14%. The statistics on total expenditure in grocery stores show that ALDI and LIDL are growing significantly and the top 4, Tesco, Sainsbury’s, ASDA and Morrison’s are decreasing. In 2017, ALDI was the 5th largest on the UK market. The top 4 are however fighting back. The article describes how Sainsbury’s and Tesco are cutting costs in the shape of management jobs to reduce complexity and ultimately become more competitive. The big supermarkets are more complex as they carry up to 30.000 items compared to only 1.300 in the discounters.