Responding to Discount: A New Business Model for Food Retailers?

Europe, 2005

Europe Council, 2005: This Report summarizes the results of an extensive study on the growth of European discount grocery retailers and the implications of this growth for non-discount supermarkets and hypermarkets. The Project was commissioned by the Council and carried out by McKinsey & Company. It benefited from the extensive involvement of leading retailers who sit on the Council and discussions with a broad set of industry experts, as well as a major survey of 10,000 European grocery shoppers recently completed by McKinsey’s European Retail Practice.

The Project’s prime objective is to highlight the trend towards value, which both underpins the remarkable growth of discount and offers avenues for non-discount retailers to fight back. It focuses on how discounters successfully serve certain groups of price-focused shoppers as well as on some of the limitations of the discount model. And while the Report touches upon some of the many implications for manufacturers of consumer packaged good, the core of its effort is centered on developing solutions for non-discount grocery retailers.

This topic is clearly central for grocers throughout Europe. The Council hopes that CEOs and others involved in setting strategy for these organizations will find the Report useful as they make their decisions in this complex arena.