29 May 2020
Posted in Retail
B&M benefits from demand for DIY & gardening as COVID-19 forces shoppers to stay home
Following today’s release of B&M Q4 figures for 2019/20, and the 8 weeks ending 23 May 2020
Hannah Richards, Retail Analyst at GlobalData, a leading data and analytics company, comments:
‘‘Discount retailer B&M has reported a strong end to its financial year, fuelled by high demand for food in March, as the COVID-19 crisis had a major impact on consumer purchasing habits. As supermarket product availability plummeted, sparked by coronavirus concerns, consumers will have ventured to discounters such as B&M, especially for tinned and packaged goods. The surge in demand within groceries benefitted Heron Foods, which reported a strong performance in both the final quarter of FY2019/20, and the first eight weeks of FY2020/21. With H1 l-f-l UK sales growth of 3.7%, B&M was reliant on a successful Q4 to prop up H2 and compensate for a weaker than anticipated third quarter, and strong category performance from food & grocery has provided it with the buoyancy it needed.
Remaining open throughout the COVID-19 pandemic, with the exception of 49 stores all of which are now reopen, B&M UK has delivered impressive retail growth, with l-f-l revenue up 22.7%, with DIY & gardening categories fuelling said growth. With consumers tied to their homes and gardens for work and leisure, unsurprisingly DIY & gardening sales have spiked, bolstered by favourable weather conditions. Even with the absence of the aforementioned categories, B&M still achieved l-f-l growth of 10.3% across the eight weeks to 23 May 2020 as many retailers remained closed, and further driven by its appealing value proposition amidst greater financial uncertainty which has prompted many consumers to trade down.
Although initial results appear positive, B&M will face greater competition as non-essential retailers begin to re-open, and consumers return to specialists previously closed to purchase categories such as DIY & gardening. The implementation of social distancing measures within stores has resulted in higher operational costs, coupled with a 10% wage increase for instore and warehouse workers. Though current levels of trading are not expected to continue, B&M’s store portfolio which is made up of out of town locations and retail parks will serve it well as consumers continue to avoid busy shopping centres and opt for more wide and open retail spaces, easily accessible by car.”