The resurgence of Aldi and Lidl has hogged the spotlight, but the growth of TJ Morris, B&M Retail, Farmfoods and other UK-owned discounters has been no less dramatic on the indie grocery retail scene, according to The Grocer’s annual ranking of the UK’s Top 50 independents.
Now in its 10th year, the rankings - which detail the 50 biggest British grocery retailers that are more than 50% owned by management or family - include 26 names not seen on the original Top 50 list, as sellouts and receiverships among leading independents have been accompanied by the march of discounters including Wilkinson, 99p Stores and most recently Poundstretcher, into grocery retail.
Total sales for the Top 50 rose 8% to £8.7bn in 2011, with pre-tax profits up 24% to £280m, delivering profit margins up from 2.8% to 3.2%.
But with sales up 11.6% and profits up 18.7% the nine discounters accounted for 51.4% of total sales (up from 50%), and 75.5% of profits (from 79.1%). Stripping out the £22m hike in profits for fine wine merchant Berry Bros & Rudd last year following disposals, profits among traditional grocery retail operators including supermarkets, c-stores and CTNs fell 2.1% while margins shrank to just 1.0%.
One sector hit hard by the discounters was CTNs. The four operators on the list together reported just a 2.9% increase in sales in 2011, while profits fell 9.5%, reducing profit margins to just 0.5%.
“Discounters continue to be our biggest threat,” said Tony Wright, MD of Maynews. “We are now competing with them.”
Mike Colley, MD of Rippleglen, added: “We must compete better with discounters and are overhauling our high street division to meet the challenge.”