Friday, 10 January 2014

Every Lidl helps -the discounting model thrive but will On line stop the dive?

The selling challenge is on for discounters as the economy strengthens     

Poundland, is buying 99p Stores announced today 5th February 2015 subject to  approval by the competition authorities.

Poundland have eyes on growing to 1000 stores
Poundland already has 458 stores in the UK and Ireland, plans to open 1,000 stores in the UK "over time". 

The discounter  sells all its items priced at £1 or less, serves 4.5m customers each week  driving its pre-tax profit before exceptional items up 29 % to £23.1m.

It opened 69 new stores over the year, including 17 in Ireland where it operates under the Dealz brand and items are priced at 1.49 euros.

West Midlands-based Poundland was bought by private equity firm Warburg Pincus four years ago for around £200m.

Poundland has other rivals

Discounting still works on very tight margins so handing out all those 1p pieces will end and of course prices will rise by a penny.

Aldi and Lidl appear to be the "clear winners" of the Christmas period with double-digit growth on the UK High Street.

The "squeezed-middle" positions of Tesco and Sainsbury's are seeing their market under pressure both from high-end Waitrose and from discounters Aldi and Lidl.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said Tesco's competitors, the discount retailers had "loudly announced their arrival", while Tesco's investment in its store revamp would continue to help profitability."

Still the UK's biggest supermarket chain, Tesco, announced its website had done well over Christmas, with a 14% rise in the number of UK online sales.

A record amount of online shopping was done in December 2013, says the British Retail Consortium (BRC).

According to the BRC survey Close to one in five non-food items was bought online last month.

There was also a 19.2% growth in internet purchases from a year earlier, the fastest increase in four years.

However, UK retail sales in total rose by just 0.4% on a like-for-like basis. The BRC said the figures represented a "respectable overall result"

David McCorquodale, head of retail at KPMG, who conducted the survey for the BRC, said Internet sales had surged in the run-up to Christmas.

However Tesco's overall  like-for-like sales  fell down by 2.4% during the Christmas period, and its shares fell by 4%.

The supermarket giant said the fall was partly due to a "weaker grocery market" in the UK.

Philip Clarke, chief executive at Tesco, said its move to open fewer stores in the UK was also behind the sales drop.

He said focusing on opening smaller, express stores in the UK would help.

Mr Clarke added: "Our overseas performance has improved since the third quarter, driven by an improving trend in Europe. This is despite continuing external challenges, including the recent political disruption in Thailand."

Tesco store in Budapest I visited last November Regrettably my
Clubcard was not accepted ! but it was worth a try.
 Hungary is one of 12 markets in which TESCO operate in the world

One Euro market in Budapest Hungary last November.
 Discounters do well in Hungary as well
Last year, Tesco announced it would be spending £1bn on improving its stores in the UK, investing in shop upgrades, product ranges, more staff, as well as its online offering.

The firm, while still the UK's biggest supermarket chain, is fighting an increasingly tough battle with discount supermarkets like Aldi and Lidl

Discounters rule

Discount retailers have outperformed the market in the economic downturn as cash-strapped consumers have sought to make savings.

Related Links

How to sell low price 

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