Demise Of Wilko Likely To Embolden The Discounters, Says GlobalData
UK homewares retailer Wilko’s collapse is poised to provide an opening for rival discount retailers to further expand, according to insights from GlobalData.
The “Value, Discount, Variety Stores and General Merchandise Retail” sector in the UK is projected to grow at a rate of 5% annually, reaching a value of up to £59.4 billion (€69.1 billion) by 2027.
Shoppers are anticipated to turn to value-focused retailers as a means of stretching their budgets.
After the food and grocery category, the home and electricals segment is expected to experience the most substantial rise in sales over the next five years, with an increase of £1.2 billion (€1.4 billion).
Consumers are turning to discounters to affordably enhance their homes and living spaces.
Wilko, which operates around 400 stores in the UK, sought administration last week after a rescue deal it was negotiating fell through.
Nick Gladding, the lead retail analyst at GlobalData, noted, “Discount retailers are continuing to benefit from a clear thirst for value among consumers.”
He highlighted that a significant portion of shoppers, particularly women and those aged 25-34, are trading down due to rising costs of essential items.
As average earnings lag behind inflation and around six out of 10 shoppers anticipate worsening personal finances, demand for discount retailers is projected to remain robust.
A recent study by GlobalData indicated that discounters such as Aldi and Lidl are drawing shoppers not only for their low prices but also for the quality of their food offerings. Around 55% of consumers reported being “very” or “extremely” satisfied with the quality of these discounters’ products.
Gladding stated, “Aldi and Lidl are set to be the prime beneficiaries as they expand to meet the surge in demand,” predicting their combined sales to grow by nearly £10 billion.
Other players like Wilko in the grocery sector, including Home Bargains and B&M, are also focusing on this market. This shift is anticipated to raise discounters’ share of the total food and grocery market from 15.3% to 18.0% over the next five years.
As per the latest market share data from Kantar for the UK grocery sector, Aldi holds 10.2% of the market share, with Lidl at 7.7%.
