The Motley Fool recently reported that “Shoppers have defected to the hard discounters Aldi and Lidl” (http://is.gd/YfraYm); repeating a common argument that I have been hearing a lot lately.
To see if this might be true, I added up the revenues of each of the listed supermarkets MRW SBRY and TSCO (I’m sure you all know the company names attached to the EPICS) in their reported years:
2012 2013 2014 MRW 17663 18116 17680 SBRY 22294 23301 23944F TSCO 64539 64826 63557 ------ ------ ------ SUM 104496 106243 105181
The latest revenues for SBRY were forecast figures.
You will see that, despite the combined revenues in 2014 being lower
than 2013, they were actually 0.7% higher than 2012. So there doesn’t
seem to be any compelling argument that supermarkets are ceding their
positions to the Aldi’s and Lidl’s of this world. It could simply be
that the stagnant revenues are the result of price competition amongst
the main players. Oligopolies are usually very difficult to displace,
and it could be that their current practice benefits them in the
long-term by making it uneconomic for smaller rivals to compete. That’s
a purely speculative argument, of course.
The revenues are not adjusted for inflation. This could be a
significant factor, as it would then suggest that the revenues only
*look* stable on the surface, but are actually deteriorating due to
some other factor (like Aldi and Lidl).
I don’t any supermarket shares.