Top tactics for growth: admired frozen food discounter Farmfoods now heads The Grocer Top 50 Sean McAllister reports on the updated ranking for 2004

Grocer, Feb 14, 2004 by Sean McAllister

Farmfoods may be a bit bashful about talking to the press, but the new number one in our Top 50 this year is certainly not shy in coming forward when it comes to increasing sales and expanding business.

Two consecutive years of 40%-plus year-on-year growth have boosted turnover at the frozen food discounter to 350m [pounds sterling] and taken it to the top of our pile. MD Eric Herd isn't one for blowing his own trumpet. But All Carr, director-general of the British Frozen Food Federation, has this ringing endorsement. "Farmfoods is a superbly run business in every way--good products, competitive prices and a very sophisticated supply chain infrastructure. Eric is a remarkable man surrounded with an excellent management team."

Most of the Top 50 retailers joined Farmfoods in having a remarkable year in what is The Grocer's third annual ranking to celebrate the diversity and success of the independent sector.

However, Farm foods has earned its top spot. It has 277 stores stretching from Invergordon in the northern Scottish Highlands to Ashford in Kent, and on its website it advertises it is seeking for new stores of 5,000 sq ft in England, Scotland and Wales. The Scottish outfit understands that the bulk of its customers are from the lower socioeconomic scale and so it sets its stall out for high quality products at competitive prices.

According to Cart, Farmfoods has become a flagship when it comes to demonstrating how to handle frozen foods. "Farmfoods proves that when a retailer takes frozen food seriously, there is expansion and profit to be made out of it," he says.

Farmfoods is also admired by its suppliers. One says Farmfoods is an intuitive retailer and not dissimilar to Morrisons. "They're a no-nonsense outfit. If they agree to do something, they do it, and as with Morrisons it is easy to get access to senior people within the company."

Another says it is successful because it understands its target market and focuses on its strengths rather than being "different things to different people". And they all say it is a very fair retailer to work with as it "affords suppliers with a margin but ensures customers get keen prices".

Last year's top dog Tates, which is owned by Spar's biggest wholesaler AF Blakemore, shouldn't be crying into its bowl. Its number one spot may have been gazumped by Farmfoods but its sales were up 8.9%. Managing director Geoff Hallam puts this down to the continued development of Tates' fresh offering--in particular food-to-go, chilled and fresh produce. The chain also replaced underperforming stores with 12 new stores.

This year Hallam plans to step up its refurb programme and push the total estate up to 200.

Preston-based supermarket chain Booths also had a good 2003 to leapfrog Unwins into the number three slot. Turnover was up 9% without adding the impact of new stores and chairman Edwin Booth predicts "robust growth" in 2004.

He admits his stores are akin to Waitrose in terms of the styling of offer but, he says, in some areas Booths is starting to improve on Waitrose.

Booth believes investment and improvements in his stores and the quality of the offer--particularly range, presentation and service to customers--have driven sales. "We have a high quality food and drink offer and we've become well known for our locally sourced food," he says.

The success of Farmfoods, Tates, Booths and the other retailers in our Top 50 ranking goes some way to explaining why there has been so much corporate activity in this sector in recent months.

One of last year's major takeovers was convenience and CTN chain Balfour, bought by the Co-operative Group in July for 30m [pounds sterling]. This year it looks as if London-based Adminstore will fall into the hands of Tesco after the multiple put in a 53.7m [pounds sterling] bid to buy 45 of its Cullens, Crispins, Harts and Europa stores. And London-based organic retailer Fresh & Wild has just been bought by US organics retail giant Whole Foods Market for $38m.

However, some of the Top 50 have been hunters rather than hunted. The biggest acquisition this year, which has not yet registered on our Top 50, is the purchase by Rippleglen of 121 Supercigs and Supernews outlets from Tesco. The multiple inherited the CTNs when it acquired T&S in October 2002 and in November Rippleglen announced that it had struck a deal. However, it doesn't take over running of the stores until February 21 when it will get its hands on a batch of four stores before taking on 12 new stores each subsequent week until May 1.The acquisitions will add about 90m [pounds sterling] to Rippleglen's annual turnover of 44.8m [pounds sterling], which would propel it from number 25 into the top five of our ranking.

Mills Group was also on the acquisition trail and added 27 CTN stores and increased its turnover by nearly 50% by acquiring Morgam News, last year's number 34, in September.

Alfred Jones purchased six stores from A&S Stores and added another 13, mostly forecourt sites, through the takeover of Jacques Loggins.