If recent reports that Dunnes Stores is planning a major UK expansion translate into reality, Margaret Heffernan will need to draw on her legendary reserves of gumption to pull off the move. The cut-throat UK retail scene is no place for the faint-hearted, although that might actually suit Dunnes' Iron Lady.

Retail property agents in Britain are speculating that Dunnes Stores is planning to open up to 40 more stores there, perhaps by acquiring a job lot of properties to be divested by one of the big UK retailers. Marks & Spencer is offloading at least nine stores, while BHS is rumoured to want to jettison up to 50.

If Dunnes does take the plunge, it would represent one of the biggest strategic pivots in the company’s 70-year history.

Some British retail analysts are unconvinced Ireland’s biggest indigenous retailer can make an impact across the sea.

"The UK market is very competitive already and there is no obvious opportunity for a new entrant, particularly when it is not clear what Dunnes' unique selling point in the UK is," said James Tracey, an analyst with Redburn.

Others, however, argue there is a chance of success if Dunnes almost literally sticks to the knitting. Sam Hart, an analyst with Charles Stanley in London, thinks a Dunnes expansion could work if the chain focuses solely on clothes and homewares.

Proposition “It is very unlikely Dunnes would make headway in grocery . . . But I think there is still room for new players in [

the textiles] market if they have a strong customer proposition,” said Hart.

How might Dunnes tackle a UK expansion, and what would it be letting itself in for were it to try?

Even for a €3.5 billion a year retailing heavyweight, the expansion speculated would be a massive decision for Dunnes. Depending on the structure of any property deal, the company would probably have to invest a minimum of £250 million (€357 million).

The group has 23 stores in the North, five in Scotland and six in northern England. An extra 40 stores – presumably most would be in Britain – would more than double its UK business.

The company has 155 stores in total, so the mooted expansion would increase its estate by more than a quarter at a stroke. Even for the doughty Heffernan, chairwoman and matriarch of the business, it would be a lot to chew at once.

The performance of its existing UK business has been patchy in recent years. Dunnes Stores (Bangor), which includes its Northern Ireland stores, had sales of £140 million in the year to the end of February 2014, down 11 per cent.

Dunnes Stores (UK), a British-registered company, also saw its sales in the same period fall by more than 10 per cent, to €24.4 million.

Most of its stores in Northern Ireland, and all of its British stores, eschew grocery sales and focus instead on textiles and homewares.

Analysts and seasoned observers of UK retail appear united on one thing: it would be commercial suicide for Dunnes to wade into the British grocery market. The sector is a war zone, with Aldi and Lidl lobbing commercial grenades at the indigenous incumbents, much like they're doing in Ireland.

"Whatever is the antithesis of milk and honey, that's what characterises the British grocery market right now," said Clive Black, head of research at Shore Capital and a high-profile British retail commentator.

Non-core assets

Sales are flat, the market is still affected by food price deflation, and the bigger supermarkets such as

J Sainsbury

are offloading non-core assets to free up capital to cope with the discounters’ onslaught.

"Aldi and Lidl has turned each of the main players [in the British grocery market] into discount retailers," said Stephen Wynne-Jones, the editor of Checkout magazine.

“Dunnes has proven itself very adept at meeting consumer demand for value in this country, [but] would it really be prepared to invest heavily in a grocery proposition in a market that is declining?”

To cope with the German discounters' push into the Irish market, Dunnes has held its share steady through a relentless campaign of discounting and vouchers. It has possibly obliterated its margins, but it has also hurt Dunnes competitors, notably Tesco. In recent months, Dunnes has even made some gains.

A similar approach would be pointless in Britain. Dunnes has no British grocery supply chain to rival the incumbents, no store network, and no chance of building enough scale to matter. It would be far tougher for it there than in its home market.

Toughing it out

“Dunnes is toughing it out in an Irish market where ‘only’ Aldi, Lidl and Tesco are present alongside

Musgrave

– no Asda, no Morrison, no

Waitrose

, and no

Sainsbury

, ” said Black.

The analyst believes a new non-food offering in the UK could work, however, if Dunnes were to focus on the north and west of Britain.

“The property market is more favourable, consumer choice has diminished and new entrants have been few and far between,” he said.

Black pointed to the recent decision by Pep &Co, a South African discount clothes retailer run by a former Asda executive, to enter the UK market with the aim of opening 50 stores in quick succession.

"Perhaps Dunnes is sharing such thinking?" mused Black. Hart also suggested Dunnes could be cooking up a similar strategy, and he pointed to the British success of Penneys/Primark, the ultimate Irish retailing export.

It would make sense. Dunnes’ 11 existing British stores are all in Scotland or northern England, giving it a nucleus for the regional strategy suggested by Black. An expansion of any scale in the south and east of England would surely be too costly.

Dunnes is reportedly interested in the nine stores being offloaded by Marks & Spencer, although many of them look unsuitable.

Most are either located in outlets centres, or are located in expensive areas in the south-east and London regions. Only a couple would suit a Dunnes raid on the UK textiles retailing market.

Slims its estate

If struggling BHS slims its estate significantly, it might be the best bet for Dunnes, with some analysts quietly speculating a deal may already be done.

BHS, which recently changed hands, is undertaking a strategic review and is set to make changes to its network one way or the other.

Its existing store formats and sizes would also suit Dunnes clothes and homewares offerings.

While grocery remains a battlefield, the rest of the UK retail market is expected to strongly improve in the coming quarters. The KPMG/Ipsos Retail Think Tank, which monitors the market in Britain, recently highlighted that its index measuring the “health of the sector” has improved for three consecutive quarters.

Retail sales linked to the home, such as furnishings and homewares, are among the best performing parts of the sector, which should provide further encouragement to Dunnes. Its homewares offering in Ireland has performed well.

It would be a gamble and, initially at least, possibly a rough ride for Dunnes in the UK.

For 73-year-old Heffernan, it would represent the ultimate challenge before she bows out, as she is expected to do, in the coming years.

"Whatever the outcome, it is interesting, noteworthy and encouraging to at least see Dunnes' fight and ambition," said Black. Dunnes Stores: Who comes after Margaret Heffernan and Frank Dunne? Margaret Heffernan has a firm grip on Dunnes Stores along with her younger brother, Frank Dunne. Both are now aged in their seventies, however, leading to inevitable speculation about who is next in line to the throne?

Dunnes has long been linked to a buyout by a suitor, most notably Walmart’s Asda. But Heffernan is said to favour handing it over to the next generation of Dunnes. Her two sons, Michael and Andrew, have both worked in the business and were once tipped as future leaders.

Andrew Heffernan, a former Goldman Sachs banker, left the group , however,and moved to New York, where he runs an upscale distributor of fashionable belts.

Michael Heffernan, who was once head of textiles, also left the business about five years ago, following disagreements with his mother.

It is likely therefore that the next leader of Dunnes Stores will be either Anne Heffernan, Margaret’s daughter, or Sharon McMahon, her niece. Both occupy very senior executive positions in the business.

McMahon, a former solicitor with the firm Matheson, is a strong contender for the top job. Her prominent role in the business was highlighted in affidavits filed in one of the many lawsuits brought against Dunnes by a former non-family executive.

Anne Heffernan is a doctor who many believe has been groomed by her mother to lead the company. Her responsibilities are thought to include human resources, one of Dunnes’ busiest departments and her mother’s bailiwick for many years.