Variety stores in Western Europe are seeing renewed interest from consumers, as operators expand rapidly, with a focus on low prices and broad product assortments. While store-based retailing more widely continues to struggle in the context of the COVID-19 pandemic, variety stores are increasingly becoming local suppliers and thus are intensifying competition with other channels. With demand for low-priced products expected to grow in the region, the variety stores channel is set to benefit.
This report comes in PPT.
The UK accounts for the largest value share in the Western European variety channel, and is home to four of the top five players in the region. Other key markets in the region are, however, showing significantly higher growth, driven by emerging players, leading to a sales shift within the region.
The COVID-19 pandemic led to widespread government-imposed lockdowns of varying lengths throughout Western Europe in 2020. For the region’s variety players, the picture was mixed in terms of sales impact, as some remained open throughout the year. Overall, the channel posted a significant sales decline.
The Western European variety channel is seeing diverging development between countries, especially since the expansion of a number of discount variety players, such as Action, has fuelled growth in markets such as France and Germany. This is helping drive growth in the variety stores channel overall.
The expansion of emerging players in urban centres of key markets has increased consumer awareness and the competitiveness of the variety channel vis-à-vis discounters and non-grocery players in the non-food segment. However, the channel faces challenges due to operators’ lack of an e-commerce presence.
The variety channel in Western Europe is expected to see growth driven by the continued growth of emerging players, which are helping to upgrade consumers’ perception of the channel. In addition, economic considerations, due to the pandemic, are likely to drive demand for low-priced products in the region.
Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.
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