Discounters in Spain

PROSPECTS

Discounters negatively impacted by Dia’s restructuring strategy but Lidl and Aldi forge ahead with expansion plans

Discounters recorded another year of significant decline in outlet numbers in 2019, which translated to a low decline in current value sales, negatively impacted by the decision by one of the channel’s major players. Distribuidora Internacional de Alimentación (Dia) SA continued to convert a number of its Dia Market stores into Dia & Go convenience stores, as the retailer sees greater growth potential for this format in high footfall areas.

Discounters expand private label lines to offer varied range of fresh, organic and on-the-go meal options

Discounters have gradually moved their private label lines towards a more premium positioning to be in line with multinational brands, including the offer of organic, natural and fresh products making them increasingly appealing to a wider range of consumers, regardless of income or age. The expanding offer from discounters is therefore attracting a younger generation of Spaniards, who are more open to trying new products and are therefore less likely to be brand loyal.

Changing consumer habits and lifestyles encourage discounters to review offer

Healthy lifestyles are leading to an increasing number of local consumers choosing to follow vegetarian and flexitarian diets, as Spaniards review their consumption habits and look to make conscious decisions about the food the purchase, encouraging discounters to continually expand their offer to reach a wider audience. Lidl is further exploring these trends by offering meat-free options to attract vegetarian and vegan consumers under its well-known Delicatessen line, where it offers a range of vegetarian ready meals and various specialities including “meatballs” and burgers called My Best Veggie.

COMPETITIVE LANDSCAPE

Dia retains dominance of discounters’ outlet network despite ongoing restructuring strategy

In terms of outlet network, Distribuidora Internacional de Alimentación retained its dominance of discounters in 2019, with its vast number of stores covering the banners Dia Market and the much smaller Dia Fresh. The retailer experienced financial difficulties over the review period which encouraged it to optimise its network by turning a number of its Dia Market stores (closing over 200 stores in 2019 alone) in high footfall areas into Dia & Go convenience stores.

Lidl strengthens leadership of discounters in value terms

Lidl Supermercados strengthened its overall leadership of discounters in value share terms in 2019, as the retailer continued to expand its outlet network. Lidl has invested in addressing emerging trends in Spain, including the increasing adoption of vegetarian or flexitarian diets, by launching a line of meat-free substitutes under My Best Veggie, a range under its Delicatessen private label line.

Aldi continues to expand network and reorganise existing stores to optimise space

Although not quite as impressive as Lidl’s expansion towards the end of the review period, Aldi Supermercados SL continued to add to its outlet network in Spain, and gained share in both stores and current value sales in 2019. The retailer plans to open approximately 30 stores per year over the early part of the forecast period, moving away from its previous strategy of concentrating on suburban areas and entering city centres to capitalise on high footfall.

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