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The rise of discount supermarkets – a report

1. Introduction

The purpose of this report is to critically analyse the following statement:

Hard discounters have been established in the UK for near-on 20 years now, and are starting to gain more of a grip on the sector (although are never likely to enjoy a market share as large as in other European countries such as Germany). Recent years have started to see a change in the positioning of their brands. Low price was once the sole selling point of such companies, but recent advertising campaigns, particularly from Aldi, are starting to put more emphasis on the quality of the items they offer. They have done so in order to attract more affluent consumers who may not have considered shopping at such stores since they might have assumed that low price equaled low quality.

Existing retailers finally seem to be considering the hard discounters as a very real threat after having ignored them in the initial stages. News of massive price cuts by supermarket giants such as Tesco are testament to the strides that low price retailers such as Aldi, Lidl and Netto are making in the sector. Suddenly consumers are realising that although the discounters don't offer many well known brand names or as many product lines as 'the big four', quality is largely comparable to anything they have to offer. As soon as this message gets through to consumers (which it is starting to now­), the discounters will start to take customers away from the main players in what is a largely saturated market. Low prices will always be high on consumers' agendas when deciding where to shop and the more the discounters can reassure consumers of the quality of their products, the more of a threat they will become to conventional supermarkets.

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