1:00 AM 11th January 2025
business
Opinion
Market Analysis: B&M & UK Grocers/Supermarkets
B&M: Competitive Edge Fading as Supermarkets Gain Ground; RisingLabour Costs Hit Labour-Intensive Model. UK Grocers/Supermarkets: Stabilising Inflation and Rising Confidence Boost Sales, Cost Pressures Persist.
In the value retailers market, Orwa Mohamad, Analyst at Third Bridge made a series of remarks regarding B&M, informed by the insights from industry experts:
“The UK value retail market is heating up. B&M’s unique edge is fading as major supermarkets launch price-matching schemes and discounters expand their store networks rapidly. With inflation easing and interest rates falling, consumer confidence is improving, driving shoppers back to core supermarkets.
“B&M may be more exposed to recent increases in minimum wage and national insurance costs because many of its warehouses and stores rely heavily on manual labor rather than automation. The key question is how much of these costs they’ll pass on to customers. However, our experts suggest B&M’s lower capital expenditure (CAPEX) could help balance this compared to more automated competitors.
“B&M’s growth hinges on opening new stores and boosting like-for-like sales.
“B&M has prioritized simplicity and transparency over loyalty programs. However, our experts caution that with most competitors adopting some form of loyalty scheme, leveraging customer data is becoming increasingly crucial in today’s market.
“Our experts believe B&M should rethink its decision to not have an e-commerce presence, especially for larger items that are harder for customers to transport from stores.”
Orwa Mohamad, also comments on grocers and supermarkets
"Stabilising food inflation at around 2.5% and a slight rebound in consumer confidence are driving increased shopping frequency and basket sizes. While volume growth remains modest, this marks the most optimistic festive season outlook retailers have had in years.
"Tesco is set to solidify its position as the top performer among the Big Four. Strategic investments in store refits and momentum in market share gains have positioned the retailer for a strong Christmas trading period. By contrast, Asda and Morrisons face mounting challenges, with unclear strategies and operational hurdles weighing on performance.
"Retailers continue to walk a tightrope as cost pressures from minimum wage hikes and National Insurance increases take hold. While passing costs to consumers is a last resort, we expect further productivity measures, tougher supplier negotiations, and cautious pricing strategies post-Christmas to protect margins.
"The competitive dynamics are intensifying. Discounters like Lidl are leading in like-for-like sales, while Aldi’s growth appears more reliant on store openings. Meanwhile, Marks & Spencer is capitalising on consumer confidence with a well-executed food strategy that combines volume, quality, and festive appeal.
"Fresh food, food-to-go and clothing categories are expected to see growth in assortment and space allocation within stores, reflecting changing consumer preferences and rebounding consumer confidence due to easing inflation and decreasing interest rates."
Third Bridge is a global primary research firm that interviews more than 6,000 internationally recognised industry experts and business leaders a year to compile 360-degree market intelligence for institutional investors. www.thirdbridge.com