A report from the Institute of Grocery Distribution (IGD) has stated that discount will be the fastest growing physical grocery channel in the next five years.
The significance of the discount channel in the UK market, which ranks third globally by value, is on the rise, said IGD. Forecasts indicate that discount sales will increase by over 19% between 2024 and 2029, ultimately capturing a market share of 16.6%.
The report said there was “encouraging growth” across the globe with new regional players emerging, discounters expanding to new markets and retailers focusing on their discount banners.
Dan Butler, senior insights analyst at IGD, said: “The continued growth of discounters in grocery retail cannot be ignored, with suppliers needing to identify opportunities to work with them and competitors wanting to know how to fight back.
“Our report shows the key trends that are driving discounters forward, which takes inspiration from our global research despite Europe’s dominance in the channel. We identify which markets have the best prospects for discount growth and who the main players will be through our data and five-year forecasts.”
Discounters should focus on shopper needs
The report highlighted key trends to discounters in 2025:
- Value leadership: Value will remain at the core of discounters’ operating model, and top of mind for shoppers
- Renewed focus on networks: To remain relevant to shoppers’ needs and to add sustainable and energy-efficient features, existing networks will be targeted for upgrades
- Rethinking non-grocery: Discounters must adapt their non-food strategy to cater to changing shopper needs
- Affordable health: Discounters will aim to limit the impact of price on shoppers’ decision-making process for healthier options
- Strengthening sustainability: Shoppers will look to discounters to help them make affordable sustainable choices, which will help discounters build trust and loyalty
Going forward, Europe will remain the discount channel’s global hotspot, IGD found, with its share advancing to more than 23% of sales by 2029. Central and Eastern European markets and Portugal offer “strong prospects” for the discount channel, with high penetration and sales growth rates to 2029.
All regions, except Asia, are expected to see discount’s market share continue to grow. Shoppers switching into the channel and networks’ continued expansion will drive growth. However, only one market outside of Europe, Canada, will have a discount market share of more than 15% in 2029.
The report predicts that Aldi and Lidl will continue to dominate the channel. The discounters’ combined total sales are set to pass US$320 billion by 2029.Together Aldi and Lidl will account for 34% of the channel’s global sales in 2029.
Lidl, Aldi and 18 other operators will account for 83% of the channel’s additional sales between 2024 and 2029, and IGD suggests they should be “top of mind” in building any strategic plans for the channel.
