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Food, Beverage & Hospitality
Published: 21 May 2014

Tesco’s Budget Zones

Extra
Tesco Metro

British supermarket giant Tesco is due to install 'pound shop' zones in hundreds of its UK stores.

The Brand Outlet concept will sell budget products for as little as 50p and will be available in nearly 300 of the chain's largest stores, according to trade magazine The Grocer.

The zones will mostly stock non-food household items, such as washing-up liquid and health and beauty products, in a bid to compete with low-cost chains such as Poundland. These stores sell items at £1 and have seen growing success in the UK, while one-euro stores are enjoying similar popularity in Europe.

While major UK supermarkets report falling sales, discount brands such as German-owned Aldi and Lidl are seeing soaring sales. According to research from Kantar Worldpanel, sales at Aldi grew by 35.3% in the 12 weeks to the end of March 2014, compared to sales from the previous year, while Lidl experienced a growth of 17.2%.

Responsive supermarkets are developing new strategies to compete, including rebranding own-brand ranges, creating tech-enhanced loyalty programmes and selecting budget-conscious brand ambassadors, such as UK supermarket Sainsbury's partnership with thrifty food blogger Jack Monroe. For more on this, see Rebranding Budget, part of the Austerity Opportunity Macro Trend.

Designer outlets are also thriving, due in part to the tough economic conditions. For more on the rise of outlet centres, see Outlet Retailing Developments.

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