Economic pressures on consumer spending are likely to have an increasing impact on the continuing development of the discount grocery sector across western and central Europe, as shoppers look to tighten their purse strings.

With prices for grocery items rising in much of the EU, European discounters, led by Lidl-owner Schwarz Group, made “significant headway” in increasing their market share during 2007, according to Planet Retail’s Top 30 rankings for the grocery retail sector.

The report’s authors found that, as a result of “relentless expansion” across Europe the discount chain had increased its European sales from over €45.5bn in 2006 to more than €51.8bn last year. Fellow Germany-based discounter Aldi also enjoyed a significant increase in sales during the year.

Despite this trend, Europe’s top three retailers remain Carrefour, Metro Group and Tesco, which still maintain strong positions in their core European markets, despite all three companies increasing looking to Asia and the Americas for their future expansion.
“All of the major players are looking to lessen their dependence on their saturated home markets,” said Planet Retail’s grocery research manager Natalie Berg.

Grocery retailing in eastern Europe, particularly Russia and Ukraine, is flourishing with sales for most retailers growing by 50 per cent year-on-year and foreign supermarket operators increasing their expansion in the region.

Looking ahead, the report’s authors believe that the current economic environment is likely to play into the hands of not only price- oriented formats, but also small-box retailers trading in residential areas.

“In the European Top 30 report, there is evidence to indicate that convenience, as well as discount stores, are likely to grow strongly in these market conditions,” said Ms Berg.

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