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Discount retailing in the UK includes grocery
retailers such as Lidl and Netto, non-grocery chain retailers such as Peacock's
Stores and The Ise Group (formerly Poundland), and factory outlet retailers.
The market has grown throughout the UK, driven by the desires of both consumers
and manufacturers. In a period when consumption has grown and consumer
aspirations have been rising, consumers have become increasingly price
sensitive. At the same time, manufacturers and brand owners have sought to sell
stock such as remainder items and seconds at reduced prices.
The UK
public's demand for competitive discounting has been in evidence since the
early 1980s, with the initial success of hypermarkets, warehouse clubs and
low-cost, bulk grocery retailers such as Makro, Netto and Lidl. Over the last
decade, out-of-town retailing has allowed for more warehouse-style stores,
where lower overheads for the retailer have led to reduced prices for the
customer, and the number of factory shops has grown, allowing manufacturers to
sell unwanted stock. Consumers have demonstrated a willingness to embrace
low-cost shopping options as varied as cruises to the French hypermarkets in
Calais and low-cost air fares to the large-scale, US discount malls.
In
1998, the market's value reached £1.03bn, which represents growth of
32.5 percent since 1994. The rate of growth slowed slightly in 1997/1998 as the
grocery discounters slowed down their expansion and new factory outlet malls
came on-stream.
Currently, organised discount retailing and factory outlet
malls are in an emergent phase in the UK. However, given their growth and
increasing importance in the US retailing scene, this form of retailing is
forecast to continue to gain importance in the UK market.
In 1999, total
sales are projected to rise by 6.6 percent to £1.1bn. Thereafter, average annual
growth of 7.1 percent will raise the market's value by a further 31.5 percent to
£1.45bn by 2003. Non-grocery sales are forecast to show the fastest
growth, rising by a total 38.4 percent between 1999 and 2003, compared to growth of
28.3 percent for grocery sales.
Text © 1999 Key Note
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Last updated by Jacob van Eldik 22th February 2000