Over the past ten to fifteen years, the UK’s discount retail sector has been on a steady upward trajectory, with both UK brands moving into Europe and European brands cementing themselves as go-to retailers alongside long-standing mainstays. But while the brands in the UK have certainly made strides in the value retail space in recent years, they haven’t hit the heights of many of their European neighbours. As inflation continues to shape consumer behaviour and private-label products become more mainstream, discounters in the UK are looking to take cues from mainland Europe, especially as some brands look to land on the continent themselves.
Across Europe, discount retailing is not just a response to economic pressure – it’s a deeply embedded part of the shopping culture, particularly in Central and Eastern Europe. In Germany, where the model originated, discount grocery is the dominant format, with Aldi commanding a 40% market share and Lidl holding 20%, reflecting decades of consumer trust in this format. This sentiment is echoed in Poland, where Lidl’s market share stands at 9%. In the UK, these numbers are lower – though not insignificant – with Lidl holding a still-growing 7.8% share and Aldi taking 10% of the market, in an, albeit, more saturated market.
“Across Europe, discount retailing is not just a response to economic pressure – it’s a deeply embedded part of the shopping culture.”
The difference lies not just in the numbers, but in the way discount retailing has evolved and been received. In countries like Germany and Poland, discounters are not perceived as budget alternatives but as mainstream, efficient, and reliable places to shop. The CEO of a leading value fashion retailer in the UK, notes that in many parts of Europe – particularly in the southern areas like Spain – there’s still a significant gap in the market, which has allowed brands like Primark to thrive with relatively little competition. They tell me: “If you look at the fashion value segment across the different markets, you’ll find that there has been a lack of value fashion retailers, at least in western Europe, until relatively recently.
“When Primark, for example, had the chance to move into France and Spain, the lack of competition meant there was a big space to be taken, and that is why it has been so successful in Europe.”
In contrast, they explain, the UK is a far more competitive environment, where value retailers are mature and well-established, making it harder for new entrants to gain traction. They say: “There are so many players in the UK like River Island and New Look, that it makes taking a larger market share harder.”
Poundland is an example of this, as it has seen declining sales in the UK, with like-for-like sales falling 7.3% in the final quarter of 2024. In contrast, its European operations under the Pepco and Dealz brands are thriving, with double-digit volume growth. Wilko’s collapse in 2023 is also a cautionary tale. Once a staple of the UK high street, the retailer shut down 400 stores before being partially revived online. Its downfall highlights the risks of failing to adapt to changing consumer expectations and the growing dominance of more agile, efficient competitors.
Ricardo Alvarez, CEO of DIA in Spain points out that the success of the value retail model lies in its simplicity: a limited number of SKUs, high product turnover, and a strong focus on private-label goods. These products are not only cheaper to produce but can also be positioned with a branded image, offering consumers the perception of quality without the price tag. He tells me: “It’s not so easy to convince customers that branded products are worth it anymore as every year they are realising that they don’t need to pay more for the brand when the brand is not adding any more value to their lives than private-label alternatives.” He explains that the real difference isn’t in the quality of the product but in the productivity of the factory – and that retailers who continue to rely heavily on branded SKUs may struggle in the long term.
This approach has been refined over decades in Europe, supported by consumer habits that prioritise value and efficiency over brand loyalty or expansive choice. In the UK, where branded goods have traditionally dominated, this mindset is beginning to shift. Consumers are increasingly recognising that private-label products can offer comparable quality at a lower price, and many say they will continue buying them even if their purchasing power improves. The challenge for UK retailers is to accelerate this shift – not just by offering cheaper alternatives, but by building trust and desirability around their own-label ranges.
This efficiency is something that discount retailers in Europe do particularly well. Lidl, for example, operates with a lean assortment that allows for faster turnover and better factory productivity. Traditional UK supermarkets instead often carry broader ranges that can dilute efficiency. Ricardo notes: “It’s all about efficiency. You want to be producing less because that’s better for streamlining in the factory.”
“Consumers are increasingly recognising that private-label products can offer comparable quality at a lower price.”
This approach doesn’t just benefit the bottom line, it also enhances the customer experience. A well-curated range can make shopping quicker and easier, both in-store and online. And the digital experience is one to watch with the UK’s high urban density and advanced logistics infrastructure offering real opportunity. One value fashion retail CEO I spoke to explains: “In the UK, it is relatively easy to do well out of an online business and I think from a retailer’s perspective it is something that should, and will, grow, but that growth will take time.” High rents and declining footfall have meant that online shopping has grown faster in the UK than in many areas of Europe. Currently, the online element doesn’t fit as neatly into the discount retail model but as logistics chains become more sophisticated, the digital channel will only continue to rise in importance in this space.
So how can UK discount retailers across both grocery and fashion adapt in order to embed this alternative way of shopping into the culture? Normalising discount shopping across all demographics, not just budget-conscious consumers, is key alongside investing in building strong, desirable private-label ranges. As well as this, embracing leaner assortments and focussing on operational efficiency will be pivotal to their success, which contrasts with the traditional UK model.
Value retailers aren’t simply about offering low prices; they are about delivering value through efficiency, trust, and smart strategy. As inflation in the UK continues to go up – rising by more than a percent between 2024 and 2025, compared to Europe’s drop of 0.2% – and the retail landscape continues to evolve, the future belongs to those who are willing to grow and take advantage of opportunity. Companies in Europe have laid the blueprint, but now it’s down to those in the UK to not only follow it, but also adapt it – and perhaps, in time, improve upon it.
