Discounter B&M acquires Heron Food Group for £152m. Heron's network of 251 stores across the north of England offer convenient city centre locations, which along with its expertise in food categories, will complement the B&M retail brand.
"Complementary, proven and profitable" businesses
The addition of 251 sites brings B&M closer to its stated ambition of operating 950 stores in the UK. Acquiring a chain with a different location profile will minimise cannibalisation, whilst Heron's focus on grocery will enable B&M to build scale in existing categories, and gain expertise in new ones. The retailer said the acquisition "will enable B&M to develop and roll out a complementary, proven and profitable discount convenience grocery brand".
Both discounters offer a limited product assortment, and share a heartland in the north of England. They have also both reported buoyant financial performances: Heron's pre-tax profit were £8.6m on sales of £274.4m last year, whilst B&M reported pre-tax profit of £190.1m on group revenues of £2,430.7m.
Small and central store locations well positioned for growth
Heron's smaller, convenient store locations are well positioned to benefit from growth in convenience and discount channels, and B&M plans to grow the Heron store network at a rate of 10 to 20 stores per year.
Key Heron statistics:
• The average store size is 2,500 sq ft compared to B&M's 19,000 sq ft
• Nearly two thirds of sites are high street locations in town centres
• 50% of shoppers walk to store
• 46% of shoppers visit on a weekly basis, and 34% visit daily
Food focus will benefit B&M
Heron's 1,200 SKU count showcases big brands. In terms of categories, its split between ambient (50%), chilled (25%) and frozen (25%), and doesn't include fresh or non-food.
We'd expect that in the future Heron will stock B&M's alcohol range and best-selling FMCG lines, gaining the advantage of increased buying power. Heron's expertise in chilled and frozen are also likely to support a step-change in B&M's grocery offering.