Really enjoyed this write up - very comprehensive on the history of the industry.
On ecommerce and ads - before Covid the big 4 uk grocers were involved in e-commerce, but deeply struggling to make the economics work, Tesco even saying it would never be profitable and therefore being hesitant about growth of this channel given group level dilution. But of course this is increasingly where customers want to be. During Covid (the incremental volumes helped), but more FMCG ad spend shifted to online grocery because of improving ROAS (Tesco in particular had invested heavily in its tech stack enabling this). Since then the company has been reporting much more positively on the economics of this channel as ad income is supplementing the increased cost to serve (as well as other initiatives around picking efficiencies etc.).
A fascinating space to follow given the complexities and challenges.
The story of the owner of the São Mateus group is very interesting. The supermarket emerged in one of the poorest states in Brazil, with the lowest HDI and in the poorest region of the country.
You're right and my next deep dive is actually on Grupo Mateus! It's a remarkable story and have really enjoyed learning about Maranhão and how the local stores compete with other cash and carry models.
The contrast between BIM and Carrefour realy stood out. Could you elaborate on the key strategic differentiators behind such varied long-term outcomes?
Hi! The main difference between both is scale and focus. BIM is mainly focused on Turkey and has $13 billion in revenues while Carrefour is $103 billion. BIM is way more focused on the bottom line while Carrefour is more of a growth at all costs model. Private label is also a big differentiator - BIM's private label is twice as concentrated (as % of sales) versus Carrefour and private label is typically more profitable for retailers.
Speaking about Dmart - "The issue, however, is its valuation at 103x earnings!" This is an incredible overvaluation of a stock by the Indian trading investors, unless they know something secret!
Really enjoyed this write up - very comprehensive on the history of the industry.
On ecommerce and ads - before Covid the big 4 uk grocers were involved in e-commerce, but deeply struggling to make the economics work, Tesco even saying it would never be profitable and therefore being hesitant about growth of this channel given group level dilution. But of course this is increasingly where customers want to be. During Covid (the incremental volumes helped), but more FMCG ad spend shifted to online grocery because of improving ROAS (Tesco in particular had invested heavily in its tech stack enabling this). Since then the company has been reporting much more positively on the economics of this channel as ad income is supplementing the increased cost to serve (as well as other initiatives around picking efficiencies etc.).
A fascinating space to follow given the complexities and challenges.
A very insightful read
The story of the owner of the São Mateus group is very interesting. The supermarket emerged in one of the poorest states in Brazil, with the lowest HDI and in the poorest region of the country.
You're right and my next deep dive is actually on Grupo Mateus! It's a remarkable story and have really enjoyed learning about Maranhão and how the local stores compete with other cash and carry models.
you will like the story
Did you look at Tienda Tres Bs ($TBBB) during this landscape?
Noticeable that none of the big UK brands featured on the list of "high performers"
Is this a question of market maturity or market saturation of retail outlets in the prime locations: a question for further analysis, perhaps.
Superb work.
The contrast between BIM and Carrefour realy stood out. Could you elaborate on the key strategic differentiators behind such varied long-term outcomes?
Hi! The main difference between both is scale and focus. BIM is mainly focused on Turkey and has $13 billion in revenues while Carrefour is $103 billion. BIM is way more focused on the bottom line while Carrefour is more of a growth at all costs model. Private label is also a big differentiator - BIM's private label is twice as concentrated (as % of sales) versus Carrefour and private label is typically more profitable for retailers.
Another interesting Deep dive.
Speaking about Dmart - "The issue, however, is its valuation at 103x earnings!" This is an incredible overvaluation of a stock by the Indian trading investors, unless they know something secret!