The collapse of UK homewares retailer Wilko is likely to present rival discount retailers with an opportunity for further growth, GlobalData has suggested.
According to GlobalData, the UK's Value, Discount, Variety Stores and General Merchandise Retail channel is likely to grow by 5% per year, to be worth as much as £59.4 billion (€69.1 billion) by 2027, with shoppers turning to value-focused retailers to make their budgets stretch further.
After food and grocery, the home and electricals sector is set to achieve the biggest cash gain in sales over the next five years, of £1.2 billion (€1.4 billion), as shoppers turn to discounters to make affordable improvements to their homes and living spaces, GlobalData said.
Wilko, which operates around 400 stores across the UK, called in administrators last week after a proposed rescue deal fell through.
'Thirst For Value'
“Discount retailers are continuing to benefit from a clear thirst for value among consumers," commented Nick Gladding, lead retail analyst at GlobalData. "Our research found that 48% of shoppers say they are trading down to cope with rising prices in essential sectors like food, groceries and toiletries, either by switching retailers or by turning to cheaper products at the same retailer. This proportion rises to 54% for women and 62% for 25-34 year olds.
"With average earnings failing to keep pace with inflation, six out 10 shoppers expect their personal finances to worsen over the next six months, according to GlobalData’s latest UK retail trend tracker, ensuring demand for discounters will continue to be strong.”
Quality Food Offering
A recent study by GlobalData found that discounters such as Aldi and Lidl are increasingly appealing to shoppers for the quality of their food as well as their low-price offering. Some 55% of consumers said they were 'very' or 'extremely' satisfied and 39% 'somewhat' satisfied with the discounters' offering.
“Aldi and Lidl are set to be the prime beneficiaries as they expand to meet the surge in demand," Gladding added. "Over the next five years we expect the pair to grow their combined sales by almost £10 billion (€11.7 billion) as they deliver on their fast-paced store opening programmes and make their stores more compelling.
"With other operators also targeting grocery, notably Home Bargains and B&M, discounters’ sales of food and grocery are set to rise from £26.3 billion (€30.8 billion) to £36.8 billion (€43 billion). This will lift discounters’ share of the total food & grocery market from 15.3% to 18.0% over the next five years.”
According to the latest market share data from Kantar for the UK grocery sector, Aldi holds 10.2% of the market, with Lidl on 7.7%.
