The New Food Discounters: Are They a Threat to the Major Multiples?

Rapid change in UK food retailing, in particular the entry of European discounters such as Aldi and Netto, has provoked speculation about the effect of these entrants on the major multiples. The discount sector is growing and the major multiples are trying to appear more price competitive. Reviews the emerging discount sector – its development and growth. A case study of one of the majors examines the effect of the discounters on turnover, and provides evidence that the turnover losses to the majors from discounter competition is minimal, and that the significant threat remains other multiples. The multiples still have more to fear from each other than they do from the discounters. However,the majors do now appear to be taking actions to limit the effect of the discounters. The growth of discounting and the success of the major multiple superstores seems to reflect polarizing markets. Examines future prospects for the food discounters.