The performance of discounters will continue to benefit from the demand from prevailing lower-income groups, supported by South Africa’s ongoing income inequality, which translates into the Gini coefficient reaching 64% by 2027. As lower-income groups grow to represent 43% of the population aged 15 years and above by 2040, pressure from stakeholders will likely encourage the government to develop a more permanent grant system, allowing this audience access to essential goods and services from affordable formats such as discounters.
The competitive landscape of discounters in South Africa is expected to remain highly concentrated over the forecast period. The trend will be supported by brand equity built over the past decades and retailers’ strategic positioning in lower-income areas.
Towards the end of the review period, operators of discounters were reluctant to adopt an omnichannel approach, despite the momentum gained by e-commerce since the pandemic. The reluctance to expand online was mainly driven by relatively low internet penetration across targeted markets, with convenience driven by proximity rather than e-commerce services.
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Discounters are chained retail outlets typically with a selling space of between 400 and 2,500 square metres. Stores have a primary focus on selling a limited range of foods, beverages, tobacco and non-groceries at budget prices, regularly via private label. Discounters can be classified as hard discounters and soft discounters. Hard discounters, first introduced by Aldi in Germany, are also known as limited-line discounters. Stores are typically 400-900 square metres and stock fewer than 1,000 product lines, largely in packaged groceries. Product range available is predominantly made up of private-label brands. Soft discounters are usually slightly larger than hard discounters, and are also known as extended-range discounters. Stores typically stock 1,000-4,000 product lines. As well as private-label and budget brands, stores commonly carry leading brands at discounted prices. Example brands include Aldi, Lidl, and Dia.See All of Our Definitions
This report originates from Passport, our Discounters research and analysis database.
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