Millions of first-time shoppers flocking to budget retailers have helped boost their revenues by nearly a fifth to £4.9 billion, according to a new report.
Nielsen's first-ever retail performance data on the bargain store sector indicates that Poundland and B&M saw a 17 per cent rise in sales in the year to July, challenging the ongoing and fierce competition in the UK’s grocery sector.
In the past year alone, more than 2.2 million households bought from a value retailer for the first time, with 52 per cent of those shopping at Poundland.
According to Nielsen, the growth was partly driven by the sale of fruit and vegetables, which have seen the biggest rise in popularity out of all the products on offer at budget stores.
In addition, around 78 per cent of UK households have now shopped at a budget store. This makes them more popular than discount grocers Aldi and Lidl, which are visited by 75 per cent of households.
Nielsen's UK head of retailer insight Mike Watkins said an increase in visitors – both first time and regulars alike – at budget stores for items that they would normally purchase at supermarkets is the main reason behind the spending growth.
"People are starting to visit for their regular grocery staples and more experienced bargain store shoppers are becoming interested in adding fresh produce to their repertoire," he said.
"This is similar to what we saw some years ago with Aldi and Lidl, who initially attracted shoppers with special buys for non-food items and low prices on groceries."
Nielsen’s data also said that bargain stores "removing the £1 straitjacket" and offering more expensive products also bolstered sales.
In addition, around 31 per cent of the increased annual amount British shoppers spent at bargain stores came from people redirecting their spending from supermarkets or health and beauty retailers.
The Big 4 grocers accounted for 73 per cent of spend shifted away towards bargain stores.