The market for hard discount - Germany

1.1 Introduction

The hard discount market is defined by low-price sales compared to the market price. This price gap is achieved by reducing operating costs. However, the price discount also has an impact on supply, as discount stores usually offer only a limited selection of items or offer products at different times of the year, depending on stock levels.

The hard discount market mainly includes groceries, household goods, and toiletries. The first hard discount stores were established in Germany in the 1940s, long before their international expansion.

Globally, the hard discount market has grown steadily in recent decades, reaching an estimated value of nearly $800 billion by 2022. Europe accounts for the largest share of this market, followed by North America and Asia. The dynamic of this market follows closely economic fluctuations. Recently, hard discounters have seen an unprecedented increase in demand, which should be explained by the various systemic and economic crises (war, purchasing power) we are currently experiencing.

In Germany, the hard discount market is very developed, as the country was the trailblazer of this type of business. In Germany, hard discounters offer outstanding quality products compared to the prices. Many countries have developed an equivalent of this type of retail chain, such as the United Kingdom with the "Poundland". Nevertheless, the quality is always compromised by the lower prices. Surprisingly, this is not the case in Germany.

In Germany, "hard discount" stores account for about 40% of the national food retail market. The typical profile of German customers is very diverse. Saving money isn't limited to people in financial difficulty, especially in German culture. Even the wealthiest people in Germany will try to get the best possible value for money.

The most important companies in the German hard discount market are Aldi and Lidl, brands that are also expanding rapidly internationally.

For some time now, hard discount stores have been placing more emphasis on organic, local, and fair trade products, while keeping prices low. Digitalization and the development of e-commerce have also become major challenges for hard discount market firms. These innovations enable further optimization of distribution chains so that companies in this sector can remain competitive despite a saturated market.