Discounters in Austria

PROSPECTS

Forecast remains positive for discounters

Continuously increasing consumer frequency and a healthy level of expansion is expected to help discounters remain one of the top performing channels in grocery retailers in Austria over the forecast period. With the review period impacted by the closure of the Zielpunkt discounter chain, the channel is predicted to record stable growth over the forecast period on a similar level to hypermarkets, leaving behind other channels such as supermarkets, convenience stores and forecourt retailers.

Hard discounters to soften

Hofer and Lidl will likely be responsible for the largest part of the growth as the former “hard discounters” are anticipated to become even softer, offering an increasing range of branded products along with their popular private label lines in addition to an increasing role of price campaigns in their strategies. As brands in other grocery formats are at the same time anticipated to continue increasing their competence in private label, lines between various channels will increasingly blur.

Discounters still sees potential for new store openings

In 2017, Lidl Austria GmbH announced plans for a more intense outlet expansion in Austria. In the business year 2017/18 (year-end February), the company invested EUR100 million in new store openings and the modernisation of existing ones and estimated another EUR100 for the following year.

COMPETITIVE LANDSCAPE

Hofer retains dominance

Hofer celebrated its 50th anniversary in 2018 and continued to lead discounters in Austria. Due to its highly trusted private label lines, aggressive price campaigns and popular non-grocery ranges, the company enjoys an extremely high level of consumer loyalty as it is considered that approximately 90% of all Austria consumers shop at Hofer, at least occasionally.

Lidl remains ambitious

Due to its stronger expansion activities, Lidl captured marginal value share from Hofer and Penny in 2018 and this trend is likely to prevail if Lidl can successfully continue its expansion plans over the forecast period. However, in the face of Hofer’s dominant sales productivity per area, the company’s leadership in discounters is not in doubt for the foreseeable future.

No major moves by remaining players expected

While Hofer and Lidl are set to continue aggressively searching for growth and to continue making large investments in Austria, competitors Norma GmbH & Co KG and Rewe International AG’s Penny Markt are expected to remain more passive over the forecast period. Norma has only a regional presence in Austria limited to the northwestern part of the country, which can be supplied from its logistics facilities in Germany.

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