Challenges Of New Entrants In UK Supermarkets – A Case Study Of Tesco

Background

The primary aim of the chapter is to critically analyze and understand the overall way in which the supermarkets have been established and the way in which they function. In line with this, background into the challenges imposed by the new entrants on the business would also be assessed. The key research aims, objectives as well as the rationale of the study would be discussed.

New entrants are often considered to be a key threat by the current business enterprises in consideration of the fact that they bring about new offerings, new techniques and related pricing considerations through the application of the new technology which tends to create a competitive rivalry in the industry (Berman  2015). In the United Kingdom, the grocery and supermarkets industry are largely very competitive in nature and pertaining to this, it becomes essential that the key challenges are faced and strategic decisions which are engaged in are determined (Bonfrer, Chintagunta  and Dhar  2022). Hence, the research intends to understand how the discounters have impact on the overall survival and sustainability of the Tesco as a whole. The discounters such as the Aldi and Lidl have been increasing the number of stores in a considerate manner and the overall way in which they have disrupted the operations of the giant enterprises is critical to observe (Bombaij and Dekimpe  2020). Hence, the researcher is intended to identify the nature of competition and assess how the supermarkets target the customers is critical.

The aim of the research is to study the challenges that new discounters such as Aldi and Lidl pose on major supermarkets through analysis of a case study of Tesco. Discounters tries to influence the global retail business by selling merchandizes as well as private brands at prices that are significantly lower compared to the conventional retailers. The study is intended to identify and understand how the frequent shoppers modify their overall pricing strategy and maintain the overall market share alongside the challenges hey generally face. Some key issues which would be focused on may be identified as improving prices, assortment of the products and improving store experiences.

The research question may be identified as follows:

Do the new entrants such as the discounters pose major challenges for major supermarkets?

• To determine how German discounters like Aldi and Lidl seem to impose challenge on the major supermarket chain like Tesco.
• To throw light on whether the dramatic expansion of the discounters will create massive consequences for the overall industry of the grocery retailers.
• To provide recommendations based on which the large enterprises will be able to combat against the existing competition.

The research is focused on providing an insight into the key challenges which are faced by the major supermarkets by the new discount operators (Yokoyama, Azuma  and Kim 2022). Here it becomes evident to understand the fact that the new companies such as Aldi, Amazon fresh and Lidl have created a considerate level of competition with their cheap pricing strategy and pertaining to this, the large enterprises have been finding it very difficult to engage in effective operations (Voigt, Buliga  and Michl 2017). Therefore, by undertaking the opinions of the different managers and existing retailers, the research would be able to identify he key challenges and strategies to cope up with the issues being faced. The results are expected to outline and understand the activities of the different retailers to bring about better outcomes for themselves and identify the strategies which will be best suited for them.

Research Aim and Objectives

The primary focus of the review of literature is to critically understand the way in which the discounters in the United Kingdom have created a strong market threat for existing enterprises like Tesco. In this regard, it is important to note the fact that major enterprises have been facing several issues in regard to these discounters. Hence, the primary focus of the review of literature is to critically analyze and assess the overall way in which the grocery industry in the United Kingdom has been performing and the key manner in which the discounters have been performing which pose major challenges for all other enterprises as present.

According to Sorensen  and Johnson Jorgensen  (2019), the grocery market in the Great Britain has shrunk by 3.8% as compared to the same period a year later. Pertaining to this, it becomes evidently critical to note that the growth has hit an all time high of nine percent and the entire grocery industry has amounted to over 205 billion British pounds in 2020.  Hence, as compared to the prior year, the growth has been engaged in by over 10 billion pounds. The key players in the grocery market were identified to be Tesco, Sainsbury’s Morrison’s and Asda. While Morrison’s market share was below 10%, both Sainsbury’s and Asda were identified to have 15%. Pertaining to this, Tesco had a share over the quarter of the market. However, discounters like Aldi had been performing well and was just two percent away from taking over the Morrison’s (Gielens et al. 2021).

According to Galkin e al. (2019), the relevant grocery sales channel may be identified to be the supermarkets as well as the convenience stores. In addition to this, hypermarkets as well as discounters in the form of Aldi and others have been increasing. Although the online sales are popular, however, the number of people who ordered groceries online has reached 30% in 2019.Moreover, due to the pandemic, this share has increased by 10% (Steenkamp 2018)

Figure 1: The grocery industry of UK

Source:  Statista.com 2022

According to Hardaker (2018), several large retailers such as Tesco are facing several challenges in the domain of operations since the large discounters such as Aldi and Lidl have been performing well and have now captured a substantial portion of the grocery industry. In this context, it is critical to identify that this growth has brought about a shift in the retail patterns. Currently, Aldi and Lidl stand at 5.6% and 4.2% as compared to Tesco at 28.2%.  However, as compared to the dominance of Tesco, these market shares can still be identified to have considerate relevance.  Since these discounters have increased in relevance, there has been a remarkable drop in the market share of Tesco. Here it is critical to understand that the discounters have grown dramatically over the last few years and these firms have taken over a considerable market share. According to Sorensen  and Johnson Jorgensen (2019), the major discounters who have grown in the last few years have expanded considerably and engaged in the assortment of products and improved the related experience of the shopping in addition to earning a considerate margin. Due to the presence of these firms, other enterprises have experienced a drop of about 5% in share and 3% in the domain of shareholder value. Seubelt, Michalke  and Gaugler  (2022) has researched in this domain of the discounters and how the hold the overall discounters have been able to perform considerably well. The research identified that the discounters had disrupted the major enterprises and how they engage in selling product assortments who are solely targeted towards the different needs of the customers. Hence, through this facility, the discounters are able to sell a large quantity of individual customers (Lamey  2014). In this regard, it is critical to identify that the higher variety offered by discounters which allows arrangement of the supply chain and bigger production size which facilitates a lower price for the different discounters. Hence, the popularity of the discounters has enabled some established grocers like Tesco who have not been able to take the necessary action. Pertaining to this, the mainstream grocers would be required to revamp the operations and engage in spinoff discounts (Saber  and Weber  2019).

Impact of New Entrants on UK Supermarkets

Harrison et al. (2019) mentioned that in the context of the United Kingdom, the discounters have been able to engage in taking over a considerate market share and have been competing against the different competitors.  The key formula for winning over the market has been the lower prices for the privately labelled products. The stores have bee put up with a considerably lower budget which has led to the overcrowding of the stores and made the customer realize that they tend to deliver a better value. Hence, this helped in increasing the traffic. Hence, discounters like Aldi and Lidl have been able to disrupt the retailers such as the Tesco in the United Kingdom. Larsen et al. (2020) also outlined that consumer spending went down to a considerate extent in the recent years and in this regard, it is evident to note that the discounters have been able to cater to this consumer behavior and take advantage of the related engagements…mentioned that this aspect could be ignored in the past few years , however, the times have changed right now and pertaining to this, the discounters have been increasing considerably in several countries such as the Poland, turkey, Denmark and others. Fornari et al. (2020) mentions that the growth shows signs of progress as the household incomes have been increasing. In this context, it is evident to note the fact that back in the year 2020, the discounters increased their store location close to 4.5% in comparison to the major supermarkets who were able to raise it by 2.9% (Pérez-Mesa et al. 2019). It is strongly believed that such expansions are bound to become even more popular in Eastern Europe as compared to Latin America due to increase in a diverse workforce and income base (Jacobsen et al. 2017).

Figure 2: Diagrammatic Representation of the Growth of Discounter in Western Market

Source: (bcg.com 2021)

Neumeier  and Kokorsch  (2021) mentioned that when considering the demographic aspect of the growth, it can be identified that the millennials have contributed considerably towards the same.  In the different developed countries such as the United States, United Kingdom as well as Europe, Australia, Canada and Japan, the population has become close to 275 million and this is considerably higher than other segments as available. Moreover, the purchase behavior of the millennials can be identified to be very different from the different customer segments. In this regard, with their overall spending.

Chatterjee  (2017) mentions that when identifying and understanding the overall success of Aldi, the enterprise found immense success which helps it to engage in an effective operating model and maintain lower costs.  The reason why the firm has been able to find considerate level of success may be identified to be due to the reduction of costs across all areas of the business and hence, Aldi is able to save time, energy as well as resources (Steffen  and Doppler  2019). Pertaining to this, Aldi has applied the lean thinking principles (Loy et al. 2020). The application of the lean thinking principles ensures better time-based approach to the product range. Moreover, Aldi also sells a smaller version of every product in contrast to the competitors and has engaged in a comprehensive technique of packaging and utilizing the economies of scales. Hence, this has allowed the enterprise to perform well. The values of Aldi are focused on consistency, simplicity as well as responsibility (Fornari et al. 2020). This facilitates better efficiency and such business model cannot be engaged in by the other enterprises. Moreover, another reason why Aldi has been successful is due to the fact that the enterprise does not engage in elaborate displays (Lienbacher et al. 2021). By reducing the costs as involved in every field, the enterprise has been able to find long term success which has helped in bringing about better engagements. Hence, through minimization of costs better advantage can be gained.

Research Question

Therefore, although the research has successfully been able to identify the key way in which the discounters have been able to take over a considerate market share and the way in which they have engaged in operationalizing their costs savings schemes, there exists a gap in the domain of identifying and understanding how these discounters have been able to engage in a threat to the different enterprises who have been established since a long time (Evans  and Mason  2018). Hence, the study is focused on fulfilling this gap and identifying the way in which the enterprises have found it difficult to prosper since the advent of the discounters.

Therefore, the review analyzed concepts related to the strategies applied by the discounters and assisted them in understanding how the grocery industry has been performing at present. Pertaining to this, the key challenges for the current enterprises have also been analyzed critically.

In order to fulfill the research gap, a comprehensive study has to be engaged in. Hence, the research employs several research techniques which will give way to ensuring better results and related outcomes. Hence, the chapter shall outline the research methods as applicable for the study.

The research philosophy can be identified to be a set of principles and conventions which have been undertaken by the researchers. For the purpose of this study, two different philosophies are largely available (Eden  and Nielsen  2020). These may be recognized as the positivist research philosophy and the interpretivist research philosophy. For this study, the positivist research philosophy has been applied. This will allow an unbiased approach towards the study and engage in better results.

The research approach is the overall plan formulated in regards to the study. It helps in determining and identifying the key way in which the data is analyzed post the collection. In his concern, it is effective to note the fact that there are two main research approaches available in regards to the study (Cypress  2018). These may be identified as the deductive research approach and the inductive research approach. On the other hand, the inductive research approach engages in inducing and involving the perspectives of the researcher to ensure better outcomes (D?wigo?  2019). As the study is focused upon understanding how the increase of discounters has impacted the challenges for Tesco, the deductive research approach is well suited for the study. This will help in understanding the issues in a systematic manner.

The research design may be rightly recognized as the overall arrangement as followed for the study. In consideration with this, it becomes evident to underline the fact that the research design determines the way in which the findings of the study would be represented for the audience (Harris et al. 2018). In this regard, the research design which has been opted for the study may be recognized as the descriptive research design (Bougie  and Sekaran  2019). The descriptive research design gives way to ensuring better understanding.

The data collection as a process may be rightly identified as the key way in which the data for the purpose of the research is engaged in. Pertaining to this, the two main methods of data collection technique may be identified as the primary and the secondary data collection technique. For this research, the primary data collection technique via survey questionnaire has been engaged in. The questionnaire has been distributed in person. Moreover, mails were also sent to the respondents to fill in the online questionnaire within 7 days (Bala  2016). The opinions would be collected from the different customers of Tesco and other discounters to identify what is the key difference between their shopping experience in terms of the discounters and other enterprises as present.

Literature Review

The sampling strategy engages in identifying a suitable sample for the study and assessing the overall viability of the target audience (Al Ghayab et al. 2016). In consideration with this, the simple random probability sampling strategy has been applied whereby the study is intended to target the customers of the enterprise. As there are a high number of customers, only 100 of them have been targeted due to the limitation of time and resources.

The data analysis can be identified as the key technique using which the researcher is engaged in analyzing the data as available for the study. There are two main data analysis techniques as available for the purpose of the study (Harris et al. 2019). These may be rightly identified as the quantitative data analysis technique and the qualitative data analysis technique. The quantitative data analysis technique is engaged in critically using statistical tools such as descriptive analysis alongside the graphs and charts (Liamputtong  2020). Another key data analysis technique may be identified as the qualities data analysis technique. In the qualitative data analysis technique, the data is analyzed using techniques such as thematic analysis or content analysis (Brannen 2017). Pertaining to this, for the given study, the quantitative data analysis technique has been applied. The SPSS software has been applied in regards to the study and the use of graphs, charts as well as the descriptive statistics such cross tabs have been engaged in. In regard to this, it is evident to underline that the use of the quantitative data analysis technique is being applied with respect to the fact that the survey questionnaire method of data collection has been applied (Camacho et al. 2020).

As the human participants are involved in the study and the questionnaire would be shared with them via mails and phone messages, ensuring that their privacy is being maintained is of utmost importance (Busetto, Wick  and Gumbinger  2020). In this concern, it becomes evidently critical to ensure that no personal information such as name, phone number and address would be published. In line with this, the consent of the participants has been collected systematically before engaging in the survey and the complete information about the project has been shared. In addition to this, all secondary data has been well referenced (Lê  and Schmid 2022).

Therefore the chapter outlined the key data collection and analysis techniques as adopted for the study and has provided the complete justification in regards to the same. Pertaining to this, the next chapter has discussed the findings of the results.

The aim of the chapter is to critically outline the findings of the survey using graphs, charts and cross tab analysis. As the study intended to identify the key way in which the Tesco and other enterprises have been facing challenges due to the advent of the discounters, the survey had been designed in a similar manner and questions have been analyzed in the following section.

Table 1

Age
	Frequency	Percent	Cumulative Percent
Valid	18-25 years	1	1.0	1.0
26-32 years	31	31.0	32.0
33-40 years	28	28.0	60.0
41-50 years	24	24.0	84.0
50 years and above	16	16.0	100.0
Total	100	100.0

Figure 3

From the given graph it can be assessed that 31% of the respondents belonged to the age group 26 to 32 years of age. This is then followed by 28% of the population who belonged to the age group 33 to 40 years of age. Pertaining to this, 24% of the population belonged to 41 to 50 years of age. Hence, the participants belonged to varying age groups.

Key Players in UK Grocery Market

Table 2

Gender
	Frequency	Percent	Cumulative Percent
Valid	Female	39	39.0	39.0
Male	45	45.0	84.0
Others	8	8.0	92.0
Prefer not to say	8	8.0	100.0
Total	100	100.0

Figure 4

The chart gives way to identifying and understanding the gender of the participants. It can be identified that 39% of the participants mentioned that they were female whereas the rest 45% were male. Hence, the opinion of both the genders has been included in the given study.

Table 3

Income
	Frequency	Percent	Cumulative Percent
Valid	Above £60000 annually	27	27.0	27.0
Below £40000 annually	39	39.0	66.0
Between £40000 to £60000 annually	34	34.0	100.0
Total	100	100.0

Figure 5

When asked about the income, it can be rightly identified that 27% of the participants mentioned that they earned above £60000 annually. On the other hand, 39% of them earned below £40000 and the rest 34% earned between £40000 to £60000. Hence, the study has been able to cover members of all income slabs as well.

Table 4

Education
	Frequency	Percent	Cumulative Percent
Valid	Bachelors	37	37.0	37.0
Diploma	6	6.0	43.0
High school	8	8.0	51.0
Masters	41	41.0	92.0
Ohers	8	8.0	100.0
Total	100	100.0

Figure 6

Identifying the education of the participants gives way to better identification of the related understanding and therefore, it can be rightly understood from the graph that 37% of the respondents have a bachelors degree. In line with this, 41% of the participants have a Masters degree. Here it is evident to consider the fac that 8% of the participants had other qualifications.

Table 5

Occupation
	Frequency	Percent	Cumulative Percent
Valid	Business	38	38.0	38.0
Others	5	5.0	43.0
Profession	38	38.0	81.0
Service	14	14.0	95.0
Student	5	5.0	100.0
Total	100	100.0

Figure 7

The occupation helps in determining the paying habits. In line with this, 38% of the participants have a profession and the rest 38% have a business engagement. In relation to this, the rest 14% have a service and hence, the opinions are divided.

In the given section, the shopping behavior of the participants have been captured.

Table 6

How often do you shop groceries?
	Frequency	Percent	Cumulative Percent
Valid	A few times a month	5	5.0	5.0
Daily	42	42.0	47.0
Once a week	12	12.0	59.0
Twice a week	41	41.0	100.0
Total	100	100.0

Figure 8

It can be identified from the graph that when asked about the frequency of shopping for groceries, 41% of the participants mentioned that they shopped twice a week. This was followed by 42% who shopped daily. The rest shopped once a week or a few times in a month. Therefore, the shopping frequency was quite different for different shoppers.

Table 7

What’s your preferred medium of shopping?
	Frequency	Percent	Cumulative Percent
Valid	Hybrid	12	12.0	12.0
Offline	54	54.0	66.0
Online	34	34.0	100.0
Total	100	100.0

Figure 9

The participants were asked about the preferred medium of shopping. Pertaining to this, it was identified that 54% of the participants preferred shopping offline whereas 34% of the participants liked to shop online. In addition to this, 12% of the shoppers liked the hybrid model whereby the switched between the two mediums as per their convenience.

In this section, factors affecting the shopping behavior of the customers have been assessed critically.

Table 8

What’s the biggest factor considered by you while shopping for groceries?
	Frequency	Percent	Cumulative Percent
Valid	Brand	13	13.0	13.0
Convenience of shopping	11	11.0	24.0
Delivery	11	11.0	35.0
Discount	9	9.0	44.0
Price	9	9.0	53.0
Quality	11	11.0	64.0
Sizes of the products	14	14.0	78.0
Value	9	9.0	87.0
Variety	13	13.0	100.0
Total	100	100.0

Figure 10

From the results, it can be assessed that 14% of the participants believed that the size of the products available, variety, convenience of shopping, quality and the brand opportunities available could be identified to be the best alternatives as available for a customer to find long term success. In this regard, it is evident to note that when the facilitations are up to a certain standard, then in such a context better engagement may be assured.

Table 9

Choose one store you shop regularly from
	Frequency	Percent	Cumulative Percent
Valid	Aldi	28	28.0	28.0
Amazon	2	2.0	30.0
Lidl	28	28.0	58.0
Others	2	2.0	60.0
Sainsbury	12	12.0	72.0
Tesco	28	28.0	100.0
Total	100	100.0

Figure 11

When asked about the stores where they regularly shop from, 28% of the participants mentioned that they shopped regularly from Aldi, the other 28% mentioned that they shopped from Lidl and the other 28% mentioned that they shopped from Tesco. In this regard, it is evident to underline the fact that shoppers were in equal number for Tesco and the other discounters.

Online Shopping and Grocery Sales

Table 10

What are the reasons you opt for shopping at Aldi/Lidl?
	Frequency	Percent	Cumulative Percent
Valid	Better pricing	19	19.0	19.0
Better quality	12	12.0	31.0
Better size	11	11.0	42.0
Better variety	20	20.0	62.0
Great discounts	14	14.0	76.0
Located nearby	24	24.0	100.0
Total	100	100.0

Figure 12

When the different respondents were asked about the reasons why the opted to shop at Aldi or Lidl, then in this context it was identified that the location, better variety and better pricing strategies could be identified to be the most common reason why the different shoppers preferred to shop at the discounter stores as available.

Table 11

What is the reason why you shop at Tesco?
	Frequency	Percent	Cumulative Percent
Valid	Convenience	11	11.0	11.0
Guaranteed quality	22	22.0	33.0
Home delivery	1	1.0	34.0
Location	24	24.0	58.0
Premium products	20	20.0	78.0
Price	22	22.0	100.0
Total	100	100.0

Figure 13

The participants were asked about the reason behind their motivation to shop from Tesco. In this concern, it is evident to consider that 22% of the participants believed that the guaranteed quality and price were great motivators which encouraged the participants to shop at Tesco. In line with this, 24% of the participants mentioned that the location was a key factor in their purchase decision from Tesco.

The challenges which are being faced by the customers plays a critical role in determining the reason based on which they choose to shop at the different stores.

Table 12

What according to you are the drawbacks of shopping at Tesco?
	Frequency	Percent	Cumulative Percent
Valid	Lack of sizing options	29	29.0	29.0
Less variety	24	24.0	53.0
Low discounts	28	28.0	81.0
Staff attitude.	7	7.0	88.0
Store location	12	12.0	100.0
Total	100	100.0

Figure 14

When asked about the challenges faced by the different customers at Tesco, it was identified that the location of the store, limited variety, lack of sizing options and low discounts were the key reasons why the customers were not willing to shop at Tesco.

Table 13

What are the drawbacks of shopping at the discounters?
	Frequency	Percent	Cumulative Percent
Valid	Not a UK based brand	26	26.0	26.0
Others	22	22.0	48.0
Premium brands not available	48	48.0	96.0
Stock issues	4	4.0	100.0
Total	100	100.0

Figure 15

When asked about the reason why it was challenging to shop at the discounters, it was identified that the non-availability of the premium brands, the brands not being a UK brand and other reasons were the key concerns why the customers did not prefer to shop from the discounters. Here it is evident to note that the reasons are not related to pricing and value.

Table 14

What would be your preference for shopping in the future?
	Frequency	Percent	Cumulative Percent
Valid	Discounters like Lidl and Aldi	67	67.0	67.0
Tesco	33	33.0	100.0
Total	100	100.0

Figure 16

The final question of the survey was to ask the participants about their preference in the future. It can be identified that 67% of the participants mentioned that they would prefer to shop from the discounters like Lidl and Aldi in comparison to that of Tesco. Hence, the popularity of Lidl and Aldi serves as a considerate challenge for the Tesco which is an established enterprise.

The cross-tab analysis helps in identifying the perspectives of the different consumers in regard to their income level, frequency and age.

Table 15

What would be your preference for shopping in the future? * Income Crosstabulation
Count
	Income
Above £60000 annually	Below £40000 annually
-What would be your preference for shopping in the future?	Discounters like Lidl and Aldi	18	27
Tesco	9	12
Total	27	39

Table 16

What would be your preference for shopping in the future? * Income Crosstabulation
Count
	Income	Total
Between £40000 to £60000 annually
What would be your preference for shopping in the future?	Discounters like Lidl and Aldi	22	67
Tesco	12	33
Total	34	100

It can be identified that irrespective of the income level, discounters such as Aldi and Lidl were largely preferred by the customers.

Table 17

What would be your preference for shopping in the future? * How often do you shop groceries? Crosstabulation
Count
	How often do you shop groceries?
A few times a month	Daily	Once a week
What would be your preference for shopping in the future?	Discounters like Lidl and Aldi	4	30	11
Tesco	1	12	1
Total	5	42	12

Table 18

What would be your preference for shopping in the future? * How often do you shop groceries? Crosstabulation
Count
	How often do you shop groceries?	Total
Twice a week
What would be your preference for shopping in the future?	Discounters like Lidl and Aldi	22	67
Tesco	19	33
Total	41	100

It can be identified that frequent shoppers preferred shopping from Aldi or Lidl as compared to Tesco.

Table 19

What would be your preference for shopping in the future? * Age Crosstabulation
Count
	Age
18-25 years	26-32 years	33-40 years
What would be your preference for shopping in the future?	Discounters like Lidl and Aldi	1	21	19
Tesco	0	10	9
Total	1	31	28

Table 20

What would be your preference for shopping in the future? * Age Crosstabulation
Count
	Age
41-50 years	50 years and above
What would be your preference for shopping in the future?	Discounters like Lidl and Aldi	15	11	67
Tesco	9	5	33
Total	24	16	100

When categorizing the choice against the age, all age groups preferred discounters.

The following findings have been obtained from the study:

• Aldi and Lidl had become very popular as discounters. The key reason for their popularity may be identified as the sizes offered, discounts, pricing and the variety offered.
• The customers felt that Tesco lagged behind in these aspects and pertaining to this, they would not prefer shopping from Tesco.
• Hence, the discounters posed a number of challenges for Tesco in the form of higher variety, low pricing, better choices of size and the discounts available which acted as an operational and financial threat for Tesco.

Therefore, the key focus of the chapter was to outline the findings of the survey and critically analyze the same. It was identified that the different customers prefer Aldi and Lidl as discounters due to several reasons. The next section summarizes the findings and provides the future scope of the study.

Shift in Retail Patterns

Conclusion

The primary focus of the study was to critically outline and understand the key threats which the discounters pose on Tesco’s wellbeing and customer base. In regards to this the study followed a comprehensive format pertaining to which the study has been divided into five different chapters. The focus of the first chapter was to outline the background of the study and describe the rationale of the study. The key reason why conducting the study appeared to be critical was due to the reason that a variety of the studies had been undertaken but there existed a gap in the domain of the impact of discounters on Tesco and related challenges for which the survey was engaged in. The literature review highlights the mechanisms of the discounters and how the grocery market flared up in the United Kingdom at present. After identifying the research gap, the research methods as applied for the study have been discussed. The primary quantitative research strategy using the survey analysis had been opted for the study and the statistical tools for the analysis have been applied. The findings threw light on the key threats of the discounters on the firms like Tesco. It could be concluded that greater discounts, better sizing opportunities, better variety and the pricing strategies were some of the key reasons why the Tesco has been affected critically. Hence, this posed financial and operational challenges on Tesco as their profitability has been impacted.

The given objectives have been set for the study:

• To determine how German discounters like Aldi and Lidl seem to impose challenge on the major supermarket chain like Tesco.

The German discounters posed a critical challenge on Tesco through greater variety, better pricing and better size availability opportunities which affected the customer purchase behavior. In consideration with this, the literature review helps in understanding their operating mechanisms.

• To throw light on whether the dramatic expansion of the discounters will create massive consequences for the overall industry of the grocery retailers.

It has been identified that the expansion of discounters has created a shift in the consumer behavior which is bound to influence the success of current retailers. This was supported by the review and the findings section.

The study possesses limitations in regard to the application of the mono method of research. In the future, an in-depth experimental and observational research can be engaged in to get deeper insights.

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