Babou: inside B&M's French acquisition

Date : 20 November 2018

We travelled to France to see one of Babou's stores following the chain's recent acquisition by UK-based variety discounter B&M.

About the store we visited

The Babou store we visited is east of Paris in a town called Bagnolet. The c.27,500 sq ft store is split across two levels. While its black exterior may not be as inviting as B&M's colourful logo, the in-store offer has a fairly similar feel with its strong focus on non-food.

Source: IGD Research

Key features

Range: around one third of the offer is dedicated to clothing, mostly for women and children, however this category has seen consistent negative like-for-like (LFL) sales. B&M plans to 'improve the product range and move closer to the B&M model'. This will see the space dedicated to clothing reduced significantly, as more space will be given to general merchandise, seasonal and ambient grocery, which currently consists of just a small confectionery range.

Source: IGD Research

Pricing and promotions: Babou places a focus on low prices with 66% of items sold below €5, and in particular, round prices. Price cut promotions are used to emphasise value and a new loyalty card is advertised in the store. As Babou integrates B&M's model we can expect this every day low price strategy to remain a key driver of footfall.

Source: IGD Research

Brands: Babou's eponymous private label brand is prominent, with brands mostly noticeable within the toy category. With B&M's focus on brands being much greater, we expect more brands will be introduced into the mix as the ranges are adapted by the new management.

Source: IGD Research

Stand-out categories: unlike B&M, Babou has a focus on beauty with a branded low level fixture aimed at women located close to the checkouts. Another standout area due to its colourful and cohesive signage is the art and crafts aisle.

Source: IGD Research

New product mix to address negative LFLs

Babou's revenues have fallen for the last three years. In its recent H1 result, B&M said Babou's LFLs have contracted by 6.4% between the start of the financial year at the beginning of February 2018 to September 2018. To address this, over 3,000 SKUs have been made ready to order from B&M's existing Asia suppliers, so we can expect changes in Babou's product mix in the near future.

It will be interesting to see the impact this has on Babou as it continues to compete with other variety players, such as Action, the country's hypermarkets which hold large non-food ranges and the growing competition from ecommerce retailers like Casino-owned Cdiscount.

Want to know more?

To read the latest B&M financial results and more on Babou, click here.

Retail Analysis subscribers can access our latest B&M store visit report here and read about discounters in France here