Research: The War of Margins - How Discounters Are Winning the Market

In the 2026 retail world, two distinct strategies stand out: the rapid growth of discount retail chains with low price margins and the efforts of experience-focused stores to generate higher margins.

While the change in consumer demand and economic pressures are behind the growth of discount stores, experience stores are trying to achieve a sustainable position by investing in customer experience and brand loyalty rather than price competition.

The Power of Discount Markets: Low Price, High Volume

In recent years, discounted price strategies have attracted attention on a global scale, especially in the food and basic consumer goods market. Discount retailers are generally able to operate at very low prices and minimal operational costs, and although their margins are low, they can generate profits with large volumes. For example, constantly low price strategies such as "everyday low price" build loyalty by constantly offering attractive prices to consumers. This approach has been implemented by giants like Walmart for many years, maintaining its customer base. The main advantage of this strategy is that discounters keep sales volume high, maintaining turnover growth despite margin reduction.

While discount retailers typically operate with gross profits of around 2–3% or sometimes even lower, traditional retailers are generally more likely to be pressured by shrinking demand and rising costs. Furthermore, discount stores have started optimizing inventory management using innovations such as data analytics and automation; This increases operational efficiency even in low-profit environments.

Discount retailers are central to the expansion of food retailing worldwide, with significant growth observed in markets such as Europe, the USA, Canada, Turkey, Russia, Georgia, Uzbekistan, Mexico, Colombia, Peru, Ecuador, Lebanon, Egypt, Morocco, South Africa, Nigeria, the UAE, the Philippines, Vietnam, China, Australia, and many others. While discount retailers increased the total number of stores, they became the locomotive of growth in the retail sector. This growth is fuelled by the demands of a wide range of consumers seeking lower prices.

Experience Stores: "Rich Experience" Keeping the Margin High

On the other hand, experience stores are trying to protect their margins through customer experience, personalization and service quality instead of directly entering price competition. The fact that physical stores still play an important role in consumers' purchasing decisions makes it necessary for retailers to integrate digital and store experience with omnichannel strategies, rather than completely abandoning physical channels. Physical stores maintain their value as spaces where consumers can establish an emotional connection with the brand and experience products.

Another area of focus for experience stores is technology and personalization. While the in-store experience is enriched with artificial intelligence, augmented reality and digital interactions, brand loyalty and repetitive shopping behavior are increased. This experience-driven approach offers a value proposition against the low-price competition of discounters and contributes to the potential for higher margins.

In addition, retailers develop strategies to connect the customer not only with price but also with their experience. For example, brand events, special product launches, experience areas or digitally integrated store applications make consumers' store visits more than just shopping. In store formats where such concepts are applied, a higher average basket value and accordingly higher margins are created because sales are based on experience rather than product-based sales.

Race in Margins and Sector Balancers

The roles of these two different strategies in the margin race shape the retail industry in today's conditions. While discount markets gain a strong position in the market with high volume despite low margins; Experience stores aim for sustainable growth with higher profit creation and customer loyalty. According to the forecasts of industry analysts, the balance between price-driven competition and experience-oriented brand loyalty in the retail world in the coming years will be decisive in terms of gaining market share and margin management.

The "low price" approach of discount stores has been instrumental in attracting consumer demand and capturing market share, while the "high value" and "personalized experience" strategies of experience stores maintain the capacity to generate higher margins. Success for retail companies is to apply these two approaches in the right balance according to customer expectations: on the one hand, there are large audiences looking for affordability, and on the other hand, there are loyal customers who invest in the brand experience with meaningful interest associations.

#smartdiscount #global #aldi #apple #cost #service #margin #value #brandloyalty #experience #personalization #retail #growth #development #focus #drc #discount #retail #consulting #discountretail #discountretailconsulting #retailconsulting #google #twitter #harddiscount #hd