TJ Morris’s Home Bargains boast that they were recently ranked 6th in the Which? list of top 100 stores in the UK; tied with Apple Stores.  Yes, you read that right.   They have over 400 outlets and are talking publicly about 800.  They are a serious player in grocery, especially in ambient food and personal care.  Whilst relatively low profile in our industry, ignore them at your peril.

So what can we learn from them?

First, find markets worth disrupting, and the customers will find you.  This week, one of the highest profile promotional display I saw in Home Bargains was for Whey Protein Powder.  “OK this is a growth category but it is still low penetration.  Surely it wouldn’t be a promotion to lead with,” I think.  But then I think some more.  We are living in a social media age.  There’s a big group of consumers scouring deals in the market (HotUKDeals have two million Facebook friends).  A few of these savvy shoppers who happen to also be fitness freaks, start to realise what Home Bargains offer in Protein Powders.  They get talking at the gym or on Instagram.  Before you know it, lots of massive, muscled people are turning up at Home Bargains (and buying other stuff while they are there).  OK, not millions of people, but enough to make it worthwhile for TJ Morris because even discounted, the products are still high ticket.

Second – go one or two steps beyond.  It’s a trade-off, isn’t it?  You either get the low prices or you get the customer experience?  Well, not really.  Yes Home Bargains offer great prices.  But they also offer clean, tidy stores, with decent space, lighting and ambience.  Customer service is a priority.  Their mantra:  “We combine the prices of a discount retailer with well-designed quality stores and fresh, friendly service”.  And most of the time, they deliver on this.  We live in very competitive times.  To win, you have to think about what consumers value but not stop there.  Give them value AND then add some – take it a step or two beyond.

Thirdly, hammer the message.  Home Bargains don’t sit back and take their value reputation for granted.  They keep on and on reminding the customer.  Star Buys (offers) signalled loud and clear.  Very prevalent use of Recommended Retail Price comparisons to let their value shine (and not just on promotions).  The store name itself.  You’d have to be a moron not to get what they are about.

Home Bargains, B&M and Poundland taken as a group are big and getting bigger.  Retailers have woken up to their importance.  FMCGs are waking up.  In many categories, it’s very important to properly factor them in to your strategic thinking.  If it ever made sense for sales people to think of them as a place to sell some volume on a marginal cost model, with the volume magically unconnected to volume sold in “normal” accounts, then that time is long gone.  Suppliers need to think out their strategy and can learn from their success.