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Britons’ spend at bargain stores hits £5 billion

Spend up 17% as 2.2 million households shopped there for first time

London, 26 August 2016. During the last year, British households spent over £4.9 billion at bargain stores such as Poundland and B&M and Home Bargains, 17% more than a year ago, according to Nielsen retail performance data released today.

Over 2.2 million households bought from a bargain store for the first time during the last year, meaning 78% of households in Britain now shop there. Over half (52%) of British households purchased from Poundland alone. Together, bargain stores are more popular than the discounters Aldi and Lidl, who are visited by 75% of households.

“The rising spend at bargain stores is driven by two things,” says Mike Watkins, Nielsen’s UK head of retailer and business insight. “The huge rise in first-time visitors and, more importantly from a long-term perspective, shoppers buying a larger repertoire of products from bargain stores – some of which they previously bought from mainstream retailers.”

The growth in sales has also been driven by bargain stores moving beyond just the £1 price tag – almost 1 in 4 items cost more – which Watkins says, “resonates well with shoppers because removing the £1 ‘straitjacket’ allows stores to offer good value across a much wider range of products, which makes for bigger baskets and more expensive trips.”

What are people buying?

Among everyday grocery items purchased at bargain stores, Household, Packaged Grocery, Confectionery and Health & Beauty are the most popular, accounting for 63% of bargain store grocery sales.

“Historically, shoppers visited them for household goods and other general merchandise, the type of ‘safe’ non-perishable categories that new shoppers initially limit their repertoire to,”says Watkins. 

However, fruit & vegetables have seen the biggest rise in popularity, albeit from a small base, over the last year in terms of number of shoppers and frequency of purchase. He says:“People are starting to visit for their regular grocery staples and more experienced bargain store shoppers are becoming interested in adding fresh produce to their repertoire. This is similar to what we saw some years ago with Aldi and Lidl who initially attracted shoppers with special buys for non-food items and low prices on groceries.”

Shifting spend

Around 31% of the increased annual amount Britons spent at bargain stores came from people shifting spend away from supermarkets and health & beauty retailers. The top four supermarkets are the most affected by this switching, accounting for 73% of spend shifted away towards bargain stores.

Bargain store hunters are more likely to shop around and use a greater range of stores than the average shopper in an effort to find the best prices. Watkins says this stands bargain stores in good stead as “their strong value-for-money proposition means they’re well-placed to continue to win market share, particularly as they continue to open new stores in retail parks and on the high street, and if Brexit turns out to affect purchasing.”

The figures come from Nielsen’s Homescan data which measures purchasing among 14,500 households – people scan the items at home they buy in shops. 

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Notes

About Nielsen Homescan Total Till

The Nielsen continuous 14,500 GB household panel is geo-demographically balanced and designed to measure household purchasing through a wide range of channels. It includes all food and drink and non-food spend (e.g. household, personal care, clothing, electrical, cards and stationery, toys, music, general merchandise, etc.) It represents the total amount paid (after all coupons and vouchers), found on the till receipt.
Everyday grocery items include: Packaged grocery, confectionery, soft drinks, beer/wine/spirits, delicatessen, bakery, dairy, fresh produce, meat/fish/poultry, frozen, plants & flowers, household, health & beauty.
Bargain stores, for the purposes of this research, includes: Poundland, Poundworld, 99p Stores, Poundstretcher, B&M and Home Bargains.

About Nielsen

Nielsen Holdings plc (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers Watch and Buy. Nielsen’s Watch segment provides media and advertising clients with Total Audience measurement services across all devices where content — video, audio and text — is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen provides its clients with both world-class measurement as well as analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries that cover more than 90 percent of the world’s population. For more information, visit www.nielsen.com