I recall when I used to cover the US grocery sector that some market share providers used to talk about the measured marked and the unmeasured market. The unmeasured market included tiny businesses like Walmart and Dollar General, meaning that the narrative around the US supermarket industry was slightly myopic to say the least.

We have a similar issue here in the UK. Although market share providers do measure and provide data for the likes of Poundland, B&M, Wilko and Home Bargains, the publicly-available data does not include these businesses, meaning that narrative in the media focuses purely on supermarkets, convenience stores and limited assortment grocers like Aldi and Lidl. And that’s before we think about operations like Costco which are excluded from any narrative whatsoever because ‘they are a wholesaler’.

The level of disruption for supermarkets caused by the likes of B&M should not be underestimated. For years, they have been nibbling away at market share in categories like ambient grocery, BWS, confectionery, household and health & beauty. Now, through the addition of chillers and freezers (empowered by the acquisition of Heron Foods), B&M is bulking up its competitive pressure on the broader grocery shop.

One might struggle to do a full family shop at B&M without running the risk of scurvy or rickets (although their canned fruit and veg range is extensive), but is has been noteworthy for me just how many shoppers you see filling entire trolleys in B&M stores these days. Despite this, they barely get a mention in stories about supermarket woes.

B&M – which, according to reports in the Sunday Times, is looking to enter the French market to complement is presence in Germany through Jawoll – has performed very well, reflected by the fact that it remains something of a stock market darling in contrast to many other retailers that have seen stagnant or declining valuations. Its most recent results showed very creditable underlying LFL sales growth of 3.6%, ending the quarter trading from 578 B&M stores and 268 Heron outlets. The longer-term goal is for 950 B&M stores.

One of the things I like about the business is its highly rational approach to expansion: it recently noted that it is not planning a great deal of growth in London because the rents are silly, adding wryly that “Dollar General’s roll-out has not been predicated on penetration of Manhattan or prime Los Angeles, Miami, Boston etc.”

Whenever I’ve introduced friends, colleagues or family members to B&M, the initial reaction tends to be one of mild distaste at the garish colour scheme, functional displays and slightly haphazard merchandising, before turning into barely suppressed joy at the sheer variety of products and brands on offer and ending in a frenzied buying spree across a variety of categories.

The treasure hunt appeal at B&M is compelling and this is backed up by some truly great prices on groceries and other consumables. A great example is a four-pack of tinned tuna – constantly yo-yoing up and down in price at supermarkets in a pattern of price establishment followed by ‘value’, they are on sale at B&M for a very convincing £3.29. Other supermarkets are selling a three-pack for £4.50. Throw some manager’s specials and WIGIG offers into the mix, and the reasons to keep going back become clear.

Once B&M has lured you in with the cut-price groceries, the hope is to then get you spending in the higher-margin non-food categories. In fairness, ranges like toys, stationery and kitchenware are improving year after year as more big brands get onboard, start directly supplying B&M and also starting to provide bespoke FSDUs and other displays.

I’m not going to pretend for a nanosecond that B&M stores are beautiful. The décor (often inherited from a recently deceased retailer) can be hit and miss and some areas of the store can look like they’ve been merchandised by throwing stuff at the shelves. But that kind of misses the point. B&M has slowly been assembling credibility and market-leading prices on branded items in key categories and that it makes it worth a visit.

It’s telling that the only stores that some of my colleagues look forward to visiting with me are Costco and B&M. Great value and great fun in their own unique ways.

Bryan Roberts, Global Insights Director

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