Home Bargains moving in to Bakery?
10 September 2019
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When the last recession hit; Home Bargains and B&M performed very well, almost to the point of being missed in the market due to their lower price outlook (branded goods too) alongside a wide range of eclectic products within non food and seasonal buys too.
This made it doubly hard for the likes of Tesco to compete with this type of store due to their wide appeal and overlapping product ranges, especially on branded lines that are typically far cheaper than the equivalent product elsewhere. Of course in the earlier days, they were clearance houses for the want of a better phrase, moving product on for retailers and suppliers.
It wasn't uncommon to see a Tesco or Asda branded shipper in B&M or Home Bargains as they took stock at rock bottom prices and moved it on rapidly, often with lines that were out of season or close to expiration.
However fast forward 7-8 years or so and the world is a different place with B&M a listed player and Home Bargains continuing to expand with nicer, newer store environments and better layouts. Now dealing directly with suppliers rather than 3rd party sourcing agents and the like, they are a force to be reckoned with and are representative of a share of the multiples (and Aldi/Lidl) basket disappearing.
Their increased locations and presence in the high street alongside retail parks and standalone sites (near enough) mean that customers can do their shopping in a number of locations without having to drive far or spend a degree of time shopping.
Additionally; both retailers have solid core ranges alongside their special buys and 'treasure hunt' based lines that encourage customers to visit, almost to see what they have in stock and especially, around seasonal times like Halloween and Christmas seeing what can be bought in these retailers first.
Both B&M and Home Bargains are straight out with Halloween and were on the pitch in early September (if not August in some cases). Seasonal is a big part of the campaign for variety stores but growth is hard to come by, even with new sites.
Competition is fierce and discounters notably have been benefitting from suppliers have no real strategy to cope with discounters and their abundance of own label imitator products, other than adding in these own-label products on shippers and in special buys too.
The shipper growth has been noted on this service for a number of months and Lidl have done well on brands, even attracting interest from Kantar around their growth in this area. The intention is to capture more of the basket spend without cutting their own-label sales.
They can never compete on branded lines in terms of product range due to the discount model, but Lidl have recently repurposed some of their non-food/ "middle of Lidl" space to "when it's gone it's gone' style offers, which is more representative of their near "B&M" offering here.
As we can see with the Lidl image; their 'middle of Lidl' is a focus on non food and new specials Monday and Thursday. "When it's gone, it's gone' is also used here but not as a primary message.
The Good Housekeeping award was intriguing. For all the specials?
The Special buys section is often better stocked than this image, but their focus on food/groceries has been notable. They have also pushed shippers in and all manner of lines around the store, a threat from Home Bargains and B&M and also keeping hold as much spend as possible?
This area in Lidl is now marked out as being specifically for family favourites and flavours of the week.
Tying up with leading brands for their branded campaign with NSPCC is also notable, these lines are not permanently ranged lines in Lidl. The bigger packs certainly not and these are merchandised via shippers so another nod for the branded suppliers working with the growth engine in the market.
Aldi is similar, without the central aisle branding but also pushing hard on brands which are key for big retailers (rotating basis, not permanent but lower prices often competitive versus variety retailers).
So all to play for and the 'big four' are continually under pressure and variety stores are pushing all the time for more sales, as are the discounters. Plus we have Poundland who are trialling a multi price model now, not just round £1/£2/£3/£5 pricing.
Who it appears are continuing to work around their limited range model in special buys and shippers all the time.
Bringing me back to the original point...
Home Bargains have introduced numerous categories, Frozen, Produce, Fresh Foods to enhance their offer and in this city-centre store - they have added a Bakery to their offer.
Although calling it a Bakery is perhaps stretching things a bit, the products are frozen and are thawed out to serve to customers. Doughnuts and Muffins are featured and this showcases another way in which variety stores are broadening their appeal and also fighting back against discounters too.
Interesting times for the sector at large once again, competition is everywhere. In differing forms, discounters growing branded sales and variety stores growing too highlights the challenge for leading FMCG suppliers.....
Perhaps they should find a strategy.
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From the Grocery Insight newsletter archive, first sent to subscribers on 10 September 2019. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.