Comment: Value groceries not so easy to conquer

Be it air travel, gyms, hotels or car hire, the bright orange livery is easily recognisable as a beacon of low prices and no frills. However the next move from the easyGroup empire seems somewhat braver, with the brand looking to expand into value grocery with its newly announced easyFoodstore concept.

While this has been identified as low risk by Sir Stelios, the chances of success are slim given the intense competition in the UK grocery market.

easyGroup has identified what it sees as a gap in the market between the discounters such as Aldi and Lidl, and food banks, suggesting there are shoppers left in limbo waiting for a knight in orange armour to sell them cheap, unbranded staples.

However, as identified by both Aldi and Lidl’s success in the UK over the past decade or so, consumers no longer choose to shop with them solely for their low prices - these retailers are increasingly being recognised for their ability to offer affordable quality. In order for easyFoodstore to acquire shoppers from the discounters, it needs to be able to offer equivalent or better quality at an even lower price. This will be difficult without significant scale.

It’s not just the discounters raising a barrier to easyFoodstore. Over the past few years we have witnessed intense value range development from both within and outside the Big Four supermarkets, alongside heavy price promotion on branded and own brand goods.

The combination of efforts made by the major players, alongside the growing popularity of the discounters, means there is little chance of easyFoodstore stealing market share from above.

With the discounters clearly marking the bottom of the market, there leaves very little between them and the thousands of food banks across the country providing those with little or no resources the food they need to survive. Sir Stelios humbly recognises a gap between the food banks and the discounters; however it is difficult to imagine a situation where a family using a food bank would look to spend money on the staples they are able to get for free.

The move is low risk, and plans to test the water with a concept store in a building already owned by the group are wise. However, this concept looks unlikely to meet the needs of the myriad of UK grocery shoppers. Few are likely to trade down to it, even less are likely to trade up, and the hazy outline of a group in the middle is difficult enough to define, let alone convince that easyFoodstore is where they should be shopping.

Andrew Stevens is senior retail analyst at Verdict