In the ever-evolving landscape of grocery retail, discounters are emerging as the undisputed champions. The Grocer recently highlighted how Home Bargains is leading the way. This trend is not just a fleeting phenomenon but a significant shift that is set to reshape the industry.
According to IGD’s latest five-year forecasts to 2029, the discount channel is poised to be the fastest-growing physical grocery channel, with a compound annual growth rate (CAGR) of 5.2%. This translates to a staggering $217bn in global growth from 2024 to 2029.
For both retailers and suppliers, it is crucial to understand the key drivers behind this growth in order to plan and strategise in the short to medium term.
The discounter landscape in 2029
Europe remains the heartland of the discount channel, home to the top 14 countries by discount market share. That trend is set to continue, as discounter share across the continent is set to advance from 21.8% to 23.1% by 2029.
However, this growth is not confined to Europe. New regional players are emerging, discounters are expanding into new markets, and retailers are increasingly focusing on their discount banners.
The key players here are Aldi and Lidl, which are set to amass $320bn in global sales by 2029. By that point, they will account for 34% of the discounter market across the globe.
But the German discounters aren’t the only ones to watch. Home Bargains has solidified its position as a leader among discounters, through its strategic approach and ability to resonate with value-conscious shoppers
According to IGD’s research, a total of 20 operators will account for 83% of the discount channel’s additional sales between 2024 and 2029 – including the likes of Dollar General and Dollar Tree in North America, plus Biedronka, X5 Group, Mercadona and Action in Europe – making them crucial players in any strategic plans.
Suppliers need to identify opportunities to collaborate with these discounters, while competitors must understand how to counteract their influence.
Five priorities for discounters
IGD’s Global Discount Trends Report has drawn inspiration from global research to determine five key drivers for discounters in their next phase of growth:
Value leadership: Value remains at the core of discounter operating models and is top of mind for shoppers. Discounters will continue to keep everyday low prices (EDLP) as their foundation, experiment with loyalty programmes, and evolve store formats to maintain their positions as value leaders.
Renewed focus on networks: Discounters have renewed their ambitious store network expansion plans. City centres are a target for expansion, and acquisitions will be used in saturated markets. To remain relevant to shoppers’ changing needs and 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. Dedicated outlet stores will become more prominent, and variety discounters will continue to enjoy fast sales growth, driven by strong store expansion in Europe. E-commerce will also play a role in the non-food space.
Affordable health: Discounters will aim to limit the impact of price on shopper decision-making processes for healthier options. Physical health will be supported through event activation, non-grocery ranges, and shopper education.
Strengthening sustainability: Discounters will increase their sustainability efforts in 2025, which will prove a critical year for meeting targets. Shoppers will look to discounters to help them make affordable, sustainable choices, which will help build trust and loyalty.
By understanding the key drivers of growth and adapting strategies accordingly, businesses can not only thrive but also lead the charge in transforming the grocery retail landscape.
The future of the discount channel is bright and full of potential. As the market continues to evolve, those who are proactive and strategic in their approach will reap the rewards. Now is the time to act, innovate, and lead the way in the discount retail revolution.
Dan Butler, senior insight analyst at IGD
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