Continuing the latest in our series of ‘it might not be pretty, but…’ Store of the Week blogs, we take a look at Heron Foods, the grocery discounter that was acquired by B&M in August 2017. If you are a fellow southern softy, then you might not be all that familiar with the business as its stores are predominantly in northern England.
B&M’s rationale for buying Heron holds a great deal of water. Although I hesitate to repeat their dreadful crime against language, B&M notes that Heron sits in a very sweet spot within UK grocery, as it is a ‘discount-venience’ retailer that straddles the growth vehicles of discount and convenience. There are plenty of synergies that have already started to bear fruit too – frozen and chilled being rolled into B&M stores, and booze and other B&M lines travelling in the opposite direction.
In order to bring you all the highlights of the Heron Foods experience, I recently embarked on one of my trademark ‘awesome Saturdays’ that saw me take in the Luton branch of Heron Foods, visit an Angling Direct store in Colchester and watch Hendon throw away a 3-1 lead to draw 3-3 away at Needham Market. The stuff that dreams are made of, I’m sure you’ll agree.
The Luton Heron store is the southernmost outpost for the retailer, opening in 2017 in a redeveloped area now overflowing with residential, retail and leisure facilities. It is fairly typical for the business – a high street site with a limited 2,500 sq. ft. footprint.
B&M’s claim that Heron straddles discount and convenience is not wide of the mark at all. Most stores are on the high street, with a fair amount in shopping centres too, and 50% of shoppers visit Heron on foot. Over a third of shoppers visit once a day, underlining the fact that Heron fulfils a role as neighbourhood store as much as a discounter.
With a strong focus on brands sold on an EDLP basis – complemented by temporary ‘Best Buy Now’ promotions – Heron’s value credentials are strong. There is a limited array of private label items under the Heron brand in chilled and there is also a couple of freezers devoted to the Xsell brand in frozen. Xsell is a brand supplied by repacking company Yearsley Food, who promise that their “repack facility offers manufacturers a discreet and professional way of disposing of problem stock”. By no means a gourmet range, but one that avoids food waste and offers shoppers extremely good value for money.
The overall product mix at first sight appears to be very much skewed towards frozen, with plenty of chest freezers devoted to a veritable feast of frozen items, the personal highlight of which was microwaveable Balti chicken pies. However, frozen accounts for just a quarter of sales: chilled accounts for another 25% with the remainder accounted for by ambient.
There were a few gaps in the range (produce, booze and tobacco) which mean that this store might fall a little short of a genuine convenience proposition, but as a neighbourhood grocery destination it stands up pretty well. The look and feel of the place won’t see Heron queuing up for any design or merchandising awards anytime soon, but the store was clean and tidy and the customer service was flawless.
So: it might not be pretty, but Heron Foods really is a very smart operation indeed. B&M has not just acquired a high-growth profitable business, it has acquired a skill set and category exposure that will accelerate its progression towards becoming a very big headache for the Big Four supermarkets.
Bryan Roberts, Global Insights Director