The Rise of Discount: How to Survive the Profit Squeeze

Discount is on the rise, as a retail format, as a product concept and as a behaviour. It has already made deep inroads on the Continent and will inevitably invade the UK too. The rapid development of discount formats– and of discount propositions within mainstream formats – is both the source and the result of overcapacity and the increasing commodity nature of the retail offering. Argues that Private Label profitability is likely to be squeezed between the new price‐based propositions and the strong national and international brands, which are fighting to maintain their share. Retailers will have to increase their efforts on Private Label and move their offering in two parallel directions:price‐driven propositions (designed for cost) and value‐driven propositions (to compete with brands). Manufacturers, in turn, will suffer unless they take initiatives to help retailers meet the growing challenge imposed by tertiary brand developments.