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B&M sales benefit from lockdown loophole, but fails to grow customer base

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Seven new B&M stores were opened in the UK though four were also closed.
Seven new B&M stores were opened in the UK though four were also closed.

Value retailer B&M has reported that its pre-tax profit more than doubled to £254 million, driven by a leap in sales.

Sales in the company’s first quarter after the first lockdown began were up 27% year-on-year, which the retailer said it expected to replicate in the second lockdown.

B&M benefits from being classed as an essential retailer due to stocking food and household goods, meaning stores have been allowed to remain open during lockdowns – an issue that has been widely discussed in the media.

A recent YouGov poll found that half of Brits (50%) think it’s unfair for big
retailers who are allowed to remain open to continue to advertise and promote offers on non-essential items throughout lockdown.

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Shoppers and workers wearing facemasks because of the novel coronavirus pandemic (Photo by OLI SCARFF/AFP via Getty Images)

B&M said it had shown it was “well-attuned to the evolving needs of customers” and that it’s “combination of everyday value across a broad range of categories and out-of-town convenient locations had proved popular with shoppers”.

While B&M will have undoubtedly profited from being allowed to remain open while others had to close, YouGov BrandIndex data shows that B&M’s strong brand is partly to credit.

Some improvement

In a ranking of high street retail brands, B&M improved five places from seventeenth to twelfth place (May to August compared with August to November) with an Index score of 18.1 – a measure of overall brand health, calculated by taking the average of Impression, Quality, Value, Satisfaction, Recommend and Reputation scores.

It’s a similar story in terms of their Value score (a net measure of whether consumers think the brand represents good or poor value for money), in which B&M moved from second place to first with a score
of 33.9, overtaking Home Bargains.

However, whilst B&M benefitted from stuck-at-home decorators buying low-cost homewares during the first lockdown, BrandIndex data shows that this won’t necessarily be repeated in the second.

Since the start of November, Consideration scores have only increased among current customers (+4.2) while scores have decreased among former customers and those who’ve never shopped at B&M (-2.2 points each).

This indicates that while B&M have seen profit and sale growth this summer, they aren’t attracting new customers to help maintain this.