EY comments on the rise of discount retailers

8 April 2014

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Julie Carlyle, Head of Retail at EY, comments on the rise of discount retailers:

“Consumer spending is very tight after several years of below inflation increases in take home pay. The consequence is that the supermarket sector is undergoing significant changes and we are seeing traditional successful players being hit hard as discount grocers excel in this new reality and achieve stellar results. Discount supermarkets may only account for 10% of the total grocery market, but their growth story is forcing the entire sector to sit up.

“Paradoxically we are seeing high-end stores doing well, based around a strong value and service mix which they have progressively developed over a number of years. Top performers in this market place have a clear positioning, know their customers, innovate constantly and can make quick decisions. Never has the old maxim "be cheaper or better but whatever you do don't get stuck in the middle" applied quite so clearly to this market.  

“For the year ahead we expect a continued improvement in consumer confidence, leading to higher spending, however, the sustainability of recovery for retailers is ensuring they know their customer and pick the right products and channel to suit their needs. Finding the right model to do this, retaining flexibility and deciding where to prioritise spending or invest, is becoming increasingly difficult as the pace of change in this sector accelerates.”