By Jamie Murray, President
3i Group is an investment holding company with the majority of its net asset value tied to a large discount retailer, Action, which operates across Europe. We highlighted Action’s value proposition in our February 2024 report, writing:
“Action is all about price. Most of its products sell at the €1-€2 price point. This drives high inventory turnover (its best stores turnover) and provides significant buying power to secure discounts from suppliers. It is not uncommon for Action to price certain SKUs (a stock keeping unit is a single product code that identifies the item at the register) at a 30-40% discount versus competing retailers. In fact, Action has been further lowering prices on some items, given lower product costs, widening the gap.”
We also shared a company analysis highlighting its internal assessment of relative pricing across European markets. We have included the updated 2026 version below in Figure 1, which compares Action’s prices on a per-euro basis against the next lowest-priced competitor in both 2024 and 2025.
Figure 1. Action Price Comparison Across European Markets (2024 vs. 2025)
Source: 3i Group plc
From 2021 through 2025, Action delivered annual same store sales growth of more than 10% as consumers increasingly embraced its compelling value proposition. Unlike European food discounters such as Lidl and Aldi, only about 30% of Action’s sales come from staples such as food and personal care. The majority comes from discretionary categories including gardening supplies, seasonal décor, sporting goods and household products, where customers have historically been willing to pay much higher markups elsewhere.
Since mid-2025, however, same store sales growth has moderated, with year-to-date results through mid-June tracking at 3.3%. Management has pointed to macroeconomic pressures in France, where retail conditions have softened, and Germany, where poor weather and higher energy costs following the Iran conflict created a more challenging retail environment. Those explanations certainly carry weight, but we wanted to revisit our original investment thesis and answer a simple question: does Action still maintain a meaningful pricing advantage over its competitors?
With the help of Anthropic’s Claude AI tool, we compared the prices of 250 everyday products across food, toiletries, cleaning supplies and household essentials between Action and competing retailers in the Netherlands, Germany, France, Poland and Italy. On average, Action was approximately 48% cheaper, meaning a basket of goods costing roughly €100 elsewhere could be purchased for about €52 at Action.
What stood out even more than the average discount was the consistency. Action offered the lowest price on 249 of the 250 products we reviewed, and 90% of those products were priced at least 30% below competing retailers. The largest discounts were found in discretionary merchandise such as home décor, batteries and kitchenware, where savings frequently reached 55% to 60%. Food categories produced smaller, though still meaningful, savings averaging just over 30%. Across individual markets, the average discount ranged from approximately 43% in Germany, where retail competition is particularly intense, to more than 50% in the Netherlands.
Bottom line, management’s long-standing claim that Action is “30-40% cheaper than competitors” appears conservative. Our analysis suggests the pricing advantage is, if anything, even wider.
For the statheads among us, the sample size is large enough to provide statistically meaningful conclusions. More importantly, the results reinforce our original investment thesis that Action continues to create exceptional consumer value through consistently lower prices. While most retailers selectively discount products or rely on loss leaders to drive traffic, Action continuously monitors competitor pricing to preserve a meaningful gap across its assortment.
The 3.3% year-to-date same store sales growth also represents an acceleration from the 2.4% reported through May. That implies same store sales growth approached 6% during the most recent reporting period, suggesting management’s pricing adjustments may already be producing measurable results.
It is also worth noting that Europe has a well-established group of grocery-focused hard discounters, most notably Aldi and Lidl. Our analysis indicates Action’s food and personal care assortment remains approximately 12% cheaper than comparable products on average, although certain individual items may still be less expensive at these retailers. Aldi and Lidl overlap with only about 20% of Action’s product assortment, primarily in food and personal care. The remaining 80% consists largely of discretionary and seasonal merchandise where Action faces far less direct competition and continues to differentiate itself through both price and assortment.
Action has also outlined plans to enter the United States, targeting an initial launch in early 2028. Investors remain focused on the costs associated with that expansion and the likelihood of success given the highly competitive U.S. retail landscape. Management, however, believes the opportunity is compelling, supported by higher household incomes, favourable demographic trends and extensive country-by-country pricing analysis designed to ensure Action can maintain an attractive value proposition. We would also point to the recent U.S. success of retailers such as Aritzia, Inditex and Fast Retailing’s Uniqlo as evidence that differentiated international retail concepts can successfully translate into profitable growth despite an intensely competitive market.
Action has been one of the fastest-growing retailers in Europe, compounding sales at approximately 16% annually over the past 16 years. Same store sales growth will inevitably ebb and flow over time, but the company’s disciplined commitment to low prices, its highly repeatable store format and its scale-driven sourcing strategy should allow it to continue outgrowing the broader retail market for many years.
The planned U.S. expansion is very much a swing for the fences. Fortunately, Action is taking that swing from a position of strength. The core European business continues to generate significant cash flow while providing a runway for new store openings that could extend well into the next decade. That combination gives management the flexibility to invest aggressively in future growth while continuing to strengthen an already exceptional retail business.
