B&M is benefiting from being in locations near a Lidl or Aldi, as shoppers trading down from the mults split their shop.
The variety discounter’s latest annual report, published yesterday, highlights how its brand-focused range complements Lidl and Aldi’s more own-label focused assortment, allowing it to share the benefit of their market share growth.
“Several competitors are highly leveraged, being privately owned, while others also appear financially constrained,” the report says. “Any weak players in the supermarket industry will become market share donors to more effective competitors.
“Limited assortment discounters (‘LADs’), continue to win substantial market share in the UK, our product range and offer remains highly complementary to LADs and many of our best-performing stores are co-located with these retailers.”
New Kantar data today puts Aldi’s market share at a record 10.2%, with its sales up 24.6% year on year in the 12 weeks to 11 June, making it the fastest-growing supermarket. Lidl’s sales growth was only slightly behind, increasing by 23.2%, to give it 7.7% of the market.
B&M has also made its case for shunning online, having retreated from an e-commerce trial earlier this year.
The report argues that “sustainable and profitable online business models remain unproven and this is to our advantage, where we offer low prices without suffering from margin dilution due to cross-subsidisation of online activities”.
“Many products and categories are not suited to home delivery models and these include groceries, household products and other non-grocery items – areas where B&M has a strong reputation and price image.”
It cites Nielsen data suggesting home delivery’s share of grocery fell from a pandemic-fuel peak of 16% to 11% in the year to March 2023. At the same time, the in-store discount channel has continued to grow, it says.
It’s a distinct change of tone since its 2022 annual report, published last June, around the time of its online launch. “Given the disruptive B&M price position, the business believes this could prove an attractive proposition for customers,” then-CEO Simon Arora said in the 2022 report.
The online service offered a range of 1,000 products with a focus on bulky general merchandise which consumers might struggle to transport, such as furniture. Delivery was offered in three to five working days, with a shipping charge starting from £3.95.
The service was ditched around the end of January this year, with home delivery removed from the retailer’s website as an option.
Arora was succeeded by current CEO Alex Russo in September.
B&M’s latest full-year results revealed group revenues jumped 6.6% to £4.98bn in the 52 weeks to 25 March 2023, putting overall sales 30.7% ahead of pre-Covid levels.
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