David Prosser: The price is right, but the offer isn't

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The Independent Online

Outlook What has happened to the discount grocers? A year ago, the rise of the likes of Aldi, Lidl and Netto seemed unstoppable, particularly in these troubled economic times. Yet the latest figures from TNS, the analysts, show that the discounters stood still or went backwards over the Christmas just gone.

Tesco, Sainsbury's, Asda and Morrisons have all boosted their market share according to TNS – Tesco itself unveiled figures yesterday that were well ahead of City forecasts. Lidl, on the other hand, lost share for the first time since 2004, while Aldi and Netto were static.

That seems counter-intuitive. It's true that consumer confidence improved last year and that many disposable incomes increased thanks to low interest rates, but shoppers know a tough 2010 is coming. Moreover, the same trend wasn't seen elsewhere on the high street, with value retailers including Poundland and Peacocks having a good Christmas. You can bet, too, that Primark will be celebrating when its update is announced on Thursday.

In fact, what seems to have happened in the groceries market is that the established players have been much more savvy about challenging the rise of their rivals than on the high street. You saw Waitrose embrace a value range, for example, while Sainsbury's and Tesco have continued to push all of their different brands very successfully. Loyalty schemes have been important weapons too.

It's also the case that the discount supermarkets are not in the class of the Primarks of this world. They compete strongly in price, but their offer is one-dimensional. Even in difficult times, being cheapest isn't always enough.