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KN52170 KEY NOTE DISCOUNT RETAILING NOVEMBER 2000

Editor: Jacob Howard
ISBN: 1-84168-133-4

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This report covers: discount grocery retailers, discount non-grocery retailers, preferred day for grocery shopping, distance travelled for grocery shopping, frequency of grocery shopping, expenditure levels on grocery shopping

Companies covered include: Aldi Stores, Costco Wholesale UK, Netto Foodstores, Lidl, Matalan, New Look Group, Brown & Jackson, Primark Stores, Peacock's Stores, TK Maxx, TJ Hughes, Bon Marche, The Ise Group, Merchant Retail Group, QS Group, TJ Norris, PKG Holdings, Bargain Booze, Topps Tiles, The Officers Club, Richleys (Out of Town), Wilkinson, Home Bargains, Poundland, McArthur Glen, MEPC, OCI, Value Retail

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EXECUTIVE SUMMARY

This report on discount retailing concerns discount grocery retailers and non-grocery retailers, and details the continued prosperity of factory outlet centres. In 1999, total sales for discount retailers in the UK were recorded at £1.24bn, a rise of 45.8 percent since 1995.

Since the first edition of this report was published in 1999, there has been an increase in the number of British consumers who visit factory outlet centres and patronise the rapidly-growing discount chains such as Matalan PLC, TK Maxx and TJ Hughes PLC. In part, this has been due to the fact that the major chains have expanded their branch networks significantly over the last 18 months (through acquiring newly-vacated larger town properties following the exit of C&A from the UK and the restructuring of chains such as Littlewoods). The number of factory outlet centres in the UK has increased to over 35 and most people can reach a factory outlet development within a 2-hour drive. Finally, the factory outlet centres have become more attractive to consumers, as the number of retailers establishing factory outlets has grown significantly and now includes major High Street brands such as Marks & Spencer and Body Shop.

In the grocery discount sector, the major discounters, including Lidl Ltd, Netto Foodstores Ltd and Aldi Stores Ltd, have largely peaked. Unlike on the Continent, where most of the discount food chains originate, the British consumer has largely moved on from shopping at various independent butchers, grocers and fishmongers and has become used to one-stop shopping. Additionally, competitor low-price chains such as Costco Wholesale UK Ltd and ASDA (and latterly Wal-Mart) have a wide product mixture, including low-end, mass-market and higher-end products.

The non-grocery discount sector has expanded extensively across the country with new branches, as well as moving into home shopping, catalogue shopping and electronic commerce (e-commerce). Following this period of rapid expansion, many discount retailers, such as Brown & Jackson PLC, are now targeting continental Europe for expansion.

This overseas expansion indicates that in some respects the UK market has become saturated. Demand for discount retailers has peaked and the non-grocery discount chains have now achieved nationwide coverage. Factory outlet centres are nearing saturation and therefore it is expected that future growth will depend on, on the one hand, the discount chains such as Matalan PLC reinforcing their image as national retail brands, and on the other hand, the factory outlets continuing to encourage consumers to visit them rather than traditional malls and out-of-town retail clusters.

In 2000, discount retail sales were expected to rise by 22.3 percent, to £1.52bn. Sales are forecast to rise to £3.92bn by 2004.

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TABLE OF CONTENTS

Executive Summary


1. Market Definition


INTRODUCTION
MARKET SECTORS
Discount Grocery Retailers
Discount Non-Grocery Retailers
MARKET POSITION
Table 1: Trends in UK Retail Sales at Current Prices (£m and percent), 1995-1999
MARKET TRENDS
Traditional Retailers Attempt to Look More Like Discounters
Discounters Eat into Traditional Retailers’ Shares


2. Market Size


THE TOTAL MARKET
BY MARKET SECTOR
Table 2: Discount Retail Sales by Sector at Current Prices (£m), 1995-1999
A GLOBAL PERSPECTIVE
US
Europe
Asia


3. Industry Background


RECENT HISTORY
Discounting
International Influences on Grocery Discounting
Factory Outlet Retailing
INDUSTRY CONCENTRATION
TRADE ASSOCIATIONS
British Retail Consortium
The Institute of Grocery Distribution


4. Competitor Analysis


THE MARKETPLACE
MARKET LEADERS
Table 3: Major UK Discount Retailers by Turnover (£000), 1998/1999/2000
DISCOUNT GROCERS
Aldi Stores Ltd
Costco Wholesale UK Ltd
Lidl Ltd
Netto Foodstores Ltd
DISCOUNT NON-GROCERS
Bargain Booze Ltd
Bon Marche Ltd
Brown & Jackson PLC
Home Bargains
Matalan PLC
Merchant Retail Group PLC
New Look Group PLC
The Officers Club Ltd
Peacock’s Stores Ltd
PKG Holdings Ltd
Poundland Ltd
Primark Stores Ltd
QS Group PLC
Richleys (Out of Town) Ltd
TJ Hughes PLC
TK Maxx
Topps Tiles PLC
Wilkinson PLC
ADVERTISING AND PROMOTION
and 2000
and 2000


5. Strengths, Weaknesses, Opportunities and Threats


STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS


6. Buying Behaviour


INTRODUCTION
SHOPPING PATTERNS
Shopping Days
Shopping (000 and percent of adults), 2000
Distance Travelled to Shop
(000 and percent of adults), 2000
Frequency of Shopping
(000 and percent of adults), 2000
Personal Selection
(000 and percent of adults), 2000
Mode of Transport
(000 and percent of adults), 2000
Expenditure Levels
in the Last Week (000 and percent of adults, housewives and men), 2000
to the Industry
OUTLET CENTRE DEVELOPERS
Freeport Leisure PLC
McArthur Glen
MEPC
OCI
Value Retail PLC


8. Current Issues


CLOTHING SALES
AND NEW STORES
NEW STORE OPENINGS
Marks & Spencer
Body Shop
Long Tall Sally
Virgin Clothing
The Virtual Factory Outlet
NEW OUTLET CENTRES


9. Forecasts


FACTORS INFLUENCING DEMAND
FORECASTS 2000-2004
Table 12: Forecast Discount Retail Sales at Current Prices (£m), 2000-2004


10. Company Profiles


Aldi Stores Ltd
Brown & Jackson PLC
Costco Wholesale UK Ltd
Matalan PLC
Netto Foodstores Ltd
Peacock's Stores Ltd
QS Group PLC
TJ Hughes PLC
TK Maxx


11. Further Sources


Associations
Periodicals
Directories
General Sources
Bonnier Information Sources
Government Publications
Other Sources

Understanding TGI Data

Number, Profile, Penetration
Social Grade
Standard Region

Key Note Research

Text © 2000 Key Note

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Last updated by Jacob van Eldik 22th November 2000