Discount retailer B&M is looking to open 50 stores this year and will be targeting the South of England in the next phase of its expansion.
The Liverpool-based retailer has a stronghold in the North but is expanding its influence across the UK.
The 12-month expansion equates to an additional 1m sq ft of space to its existing network of 560 stores. Its target is to reach a UK portfolio of 950 stores over the next six years.
Last month B&M exchanged contracts to buy a site at Wixams Northern Expansion Area in Bedfordshire where it will develop a new 1m sq ft distribution hub to promote its growth in the South. It already has 2m sq ft of warehouse space in the North West.
Chief executive Simon Arora said: “B&M is now the third-largest occupier of retail park space behind B&Q and Curry’s. This is startling to a lot of the landlord and agency community as ten years ago we didn’t occupy any retail parks.”
Site specifics
B&M is looking for both in- and out-of-town locations and will target a range of properties including high street units, standalone sites in retail parks as well as development sites.
B&M operates out of 10,000 to 30,000 sq ft units and its average rent paid is £11 per sq ft.
“We will happily sign a ten-year lease without a break,” Arora says. “We think that makes us different to a number of occupiers where five-year clauses appear to be becoming the norm.”
Arora is not fussy with regards to location specifics, an approach he will use to expand in the South. He says he will head for “any town that has a catchment of 20,000 or more that we are not already in”.
Opportunities
While other big-box retailers may be struggling, B&M is experiencing a period of growth. Arora views this as an opportunity.
“We are talking to six national retailers that have confidential store disposals,” he says.
“When one looks at the difficulties being experienced by other out-of-town retailers, part of the problem is that they signed up to rent costs that were unsustainable. The consumer is moving online for specialist products and those high rents make bricks-and-mortar retailing unviable,” he says.
B&M only operates in-store. “We are bricks and mortar only,” says Arora. “We consider that we are in good company, as fellow discounters Primark, Aldi and Lidl don’t do it either.”
He expects more store closures on the horizon for the omni-channel players too.
“Most mainstream retailers will be shrinking their estates and reinventing themselves as online retailers,” he says.
B&M strategy
The firm’s expansion may seem aggressive. But while many other retailers are looking for ways to reduce their rent bill after overcooking their portfolio plans, Arora says this is not something that will happen to him.
“We are mindful that a third of the population has never heard of B&M, so we believe that opening 50 a year is carefully managed growth and is not expanding too quickly,” he says. “We expect new UK business to grow and that’s not us taking risk, it’s assessing the growth.”
Conscious of not falling into the trap of taking on too much space with too much rent, Arora chooses his landlords carefully.
“We have a low-cost culture and that extends to our rent costs,” he says. Arora will not take on anything that he thinks is too expensive, and if a landlord hikes the rent he is not afraid to shut up shop.
“We are not shy of closing a store at lease expiry if we believe that the rent is not the market rent,” he says. “We closed a store recently in Milton Keynes after seven years of trading as we thought that the rent was not right on renewal. We don’t shy away from difficult decisions.”
B&M in numbers
560-store portfolio
Up to 5m shoppers per week
£1.7bn revenue in 2017
50 stores required in 2018
20,000 sq ft: average store size
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