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Prepared by Planet Retail | April 2005

THE UK DISCOUNT SECTOR – TRENDS & IMPLICATIONS. Prepared by Planet Retail | April 2005. West European Outlet Trends. Discount Stores. Number of discount stores in Europe by country, 1992 (% of total). The UK has seen its status as a discount market increase in recent years.

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Prepared by Planet Retail | April 2005

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  1. THE UK DISCOUNT SECTOR – TRENDS & IMPLICATIONS Prepared by Planet Retail | April 2005

  2. West European Outlet Trends 2004-01

  3. Discount Stores Number of discount stores in Europe by country, 1992 (% of total) The UK has seen its status as a discount market increase in recent years Number of discount stores in Europe by country, 2004 (% of total) 2004-01 3

  4. Channel Development for Key Grocery Formats, 2004-2009 – Number of Outlets (W Euro) Growth will continue over the next five years 2004-01 4

  5. European Market Developments by Channel, Leading Retailers (indices) 186.6 Discount Stores 181.8 Convenience & forecourt stores 179.9 Cash & carries 173.4 Hypermarkets & superstores 151.5 Supermarkets & neighbourhood stores Leading retailers are planning to grow discount formats faster than others 2004-01 5

  6. Discount StoresDiscount store numbers in Europe, 1992 - 2008 (no. of stores) The European discount channel will continue to see growth in store numbers… 2004-01 6

  7. Discount SalesDiscount Store Sales in Europe, 1992-2008 (EUR mn; incl. sales tax) …with sales to approach EUR140 billion… 2004-01 7

  8. Discount ShareDiscount Store Market Shares in Europe, 1992-2008 (% of modern grocery distribution sales) …and market share set to hit 11%. 2004-01 8

  9. Number of New Stores, 2004-2009 Discount Stores The UK will continue to see reasonable discount channel growth, although it will be outpaced by more discount-centric markets. 2004-01 9

  10. 14,407 Discount Stores No. of discount stores in Europe by country (no. of stores, 2004) Although it is home to a reasonable number of discount stores, the UK lags other markets by a massive margin. 2004-01 10

  11. Discount Stores Food market share of discounters in Europe, 2004 (discounters’ food sales as % of modern grocery distribution, grocery sales) Due to slow growth and low consumer enthusiasm for discount stores, market share has remained lower than average in the UK. 2004-01 11

  12. Discounting in the UKKey Trends & Major Players 2004-01 12

  13. 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 2004-01 13

  14. 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 2004-01 14

  15. Growth Trends – Store Numbers Discount Store Numbers, 1999-2009 Store numbers to resume upward trend after Kwik Save slimming is complete 2004-01 15

  16. Growth Trends – Total Sales Area Discount Store Sales Area (‘000 m2), 1999-2009 Similarly, sales area will resume upward progress as rivals take up Kwik Save slack 2004-01 16

  17. Growth Trends – Average Sales Area Discount Store Average Sales Area (m2), 1999-2009 Average store size will increase to extend product offers and improve the instore environment 2004-01 17

  18. Growth Trends – Retail Banner Sales Discount Store Retail Banner Sales (GBP mn), 1999-2009 Retail sales through the discount channel are poised to exceed GBP6 billion by 2009. 2004-01 18

  19. Growth Trends – Market Share Discount Store Market Share (%), 1999-2005 Slow growth and Kwik Save downsizing has seen sectoral market share slide 2004-01 19

  20. Leading Players - 1999 Leading Discounters by Stores, 1999 Kwik Save ended the 1990s with a clear advantage over its German/Scandinavian rivals. 2004-01 20

  21. Leading Players - 2004 Leading Discounters by Stores, 2004 By 2004, Lidl had overtaken Aldi and had closed the gap on the shrinking Kwik Save. 2004-01 21

  22. Leading Players - 2009 Leading Discounters by Stores, 2009 Growth plans suggest that Aldi will take top spot in outlet numbers by 2009. 2004-01 22

  23. Leading Players - 1999 Leading Discounters by Sales (GBP mn), 1999 Kwik Save enjoyed clear market leadership in 1999. 2004-01 23

  24. Leading Players - 2004 Leading Discounters by Sales (GBP mn), 2004 By 2004, Lidl had leapfrogged Aldi. 2004-01 24

  25. Leading Players - 2009 Leading Discounters by Sales (GBP mn), 2009 Aldi is on track for sector leadership. 2004-01 25

  26. Leading Players Top Discounters by Market Share, 2005 (% of MGD grocery sales) 2004-01 26

  27. 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% 2004-01 27

  28. Leading Players – Kwik Save 2004-01 28

  29. 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% 2004-01 29

  30. Leading Players – Lidl 2004-01 30

  31. 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% 2004-01 31

  32. Leading Players – Aldi 2004-01 32

  33. 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% 2004-01 33

  34. Leading Players – Netto 2004-01 34

  35. www.planetretail.net

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