Since the German discount kings Aldi and Lidl landed in the UK, the big grocers have tried with Tesco spinoff Jack’s and Sainsbury's partnership with Netto being notable failures.
However, that isn’t to a say a retailer with a different angle couldn’t come in, undercut the competition, and possibly thrive in the intense UK supermarket sector.
Enter Motatos.
A Swedish discount retailer, known better across the continent as Matsmart, claims to fill its shelves with items “that would otherwise risk being thrown away.”
That includes products being sold due to changes in packaging, overproduction seasonal, changes, or iffy best before dates.
Motatos’ model relies on building relationships with several distributors to get these unwanted items on the cheap before selling them at a slight profit.
But, given the troubles that Tesco and Sainsbury's had in competing at the discount level, alongside Aldi and Lidl’s stranglehold of the bottom end of the sector, some might wonder if Motatos is destined to fail.
Demand and supply
One of the problems a discount retailer like Motatos will face is whether there will be enough demand in times of economic stability, according to some analysts.
Of course, in the midst of an economic crisis, many more households will be looking to 'trade down' and find cheaper grocery alternatives, so Motatos, in that sense, will be entering the UK market at just the right time.
And according to Ross Hindle, an analyst at research firm Third Bridge, that demand is strong.
A prime example is a service like TooGoodToGo, which offers cheap products from restaurants that are going out of date or have some other issues, and claims to have attracted "millions of engaged users" to its app.
“I think the demand is definitely there,” Hindle added, “but can [Motatos] can get enough supply to really fund and push that demand.”
Is it ethical?
Another argument surrounding these hybrid supermarkets/foodbanks concerns the ethical nature in which they operate.
Normal circumstances would suggest that any unwanted food is given to charities and foodbanks and probably at a cheaper price than the likes of Motatos would offer.
Hindle, however, argues the opposite and believes that its arrival should be a positive and possibly “unlock some of the massive food waste that occurs" in the UK and elsewhere.
According to research from Business Waste, which collects waste of any type across the country, almost 9.5mln tonnes of food is thrown away in the UK in a single year, while 8.5mln people reportedly live in poverty.
“I think If someone can really unlock the food waste that some of the bigger retailers, restaurants and households are throwing away, I don’t think there’s anything ethically wrong.”
Of course, into that bracket of food wasters would also fall wholesale suppliers, and Motato’s would ensure that unwanted items would end up on a shelf and available for sale and consumption.
Can it thrive?
Tesco tried and failed, to enter the discount market with its Jack’s spin-off, with seven of the 13 closing, and the other six becoming Tesco stores.
Aldi and Lidl are clearly the cream of the crop when it comes to cheaper supermarkets, but that isn’t to say that they are insurmountable barriers to the market.
A new angle could be what it takes, says Hindle.
“I think it’d be tough for a competitor to try and replicate what Aldi and Lidi do and take their space,” Hindle believes.
However, “if someone comes with a different business model similar to what these players are coming in with, alongside the downtrading business environment, demand will be there and that demand can filter down to those players.”
“With consumer wallets coming under pressure as they are and what’s forecast to come through the back end of the year, there is definitely space for consumers to look for bargains.”
Hindle adds that the likely outcome is that most customers won’t do their full shops there, but rather substitute products on the cheap.
Motatos may have picked the best time to break into the UK supermarket sector, while consumers and wallet pinching and the need for cheap, everyday items is essential.
Whether it can survive beyond that depends on how many customers it nabs from Aldi and Lidl, and if the appetite to penny pinch lingers past the economic crisis.