As a wave of globalisation sweeps through the European retail sector and local supermarkets fall victim to larger foreign chains, one market stands firm. The traditional Irish retail leaders are almost unique in their ability to withstand frequent and aggressive onslaughts from their foreign rivals, as CAD-News reports.
SuperQuinn, the flagship supermarket chain in greater Dublin, is standing firm in the face of its rivals’ hunger for market share and pursuing its own expansion campaign. Feargal Quinn, the charismatic executive chairman who founded the company in the 1960s, has succeeding in winning the loyalty of many Irish shoppers by keeping the customer at the centre of his marketing strategy.
With a portfolio of nine hypermarkets and 18 supermarkets (a 19th is under construction), SuperQuinn aims to consolidate its standing in the Dublin region and gain a foothold throughout the Irish Republic. Right now the chain has the cities of Cork, Galway and Sligo in its sights, and aims to open 25 new stores in the next two years.
Despite these ambitious growth targets, Quinn has no plans to expand outside the Irish Republic.
Dunnes roaming
In contrast, most of SuperQuinn’s compatriots have already made their mark abroad, with Dunnes Stores leading the charge. Established in 1908, the historic Irish department store chain opened its first foreign outlet as long ago as 1971, setting up shop in Northern Ireland, part of the United Kingdom. Dunnes quickly built on the success of this pilot store by opening a further 22 stores throughout Northern Ireland, as well as nine on the UK mainland.
In 1980 it spread its wings further afield, opening two stores in Spain. There are now four Dunnes stores on the Iberian peninsula, and the chain is pushing forward its international expansion programme. The group operates a total of 125 shops, of which 89 are in Ireland, and employs 18,000 staff.
Musgrave bided its time – to good effect
Rival supermarket operator Musgrave waited until August 2000 before it expanded outside Ireland by taking a stake in UK counterpart Budgens, which operates 200 stores in England. In 2002, the Irish group upped its holding to take majority control of Budgens. The franchiser is also present in Spain through its seven SuperValu supermarkets, 17 cash & carry outlets and its neighbourhood convenience stores.
Musgrave’s success might be considered the most potent example of the strength of the Irish multiple retail sector. Established in 1876, the family-run business has long been a heavyweight of the Irish grocery sector. A pioneer of the cash & carry format, Musgrave operates nine megastores which together boast 80,000m2 of sales area and serve some 32,000 individual customers. A further 200 SuperValu supermarkets and 365 Centra supermarkets and convenience stores are also operated under franchise.
The Musgrave group and its franchise holders together enjoy a staggering 24% share of the Irish market
Domestic retailers have adopted a number of strategies to stand up to the power and growing presence of the international retail heavyweights in Ireland. These include expanding overseas in turn, consolidating management systems and tightening up central purchasing procedures.
The foreign giants take on the Irish bravehearts
Since it arrived on Irish shores in 1973, Dutch retailer SPAR has come a long way. The chain operates 360 stores under franchise throughout Ireland. However, Spar Ireland had a rocky year in 2002 following the sale last August of its parent company BWG by Pernod Ricard to the investment fund Electra Partners Europe.
The network of SPAR stores remains the most concentrated in Ireland and boasts “the most dynamic growth rate,” comments Rowan Roebig of Retail Intelligence, the British retail research institute.
Leading UK grocer Tesco only entered Ireland in 1997, via its acquisition of Power Supermarkets. Today the UK behemoth claims to be the largest grocer in Ireland, operating 76 stores throughout the country and employing 10,200 people.
Since its launch in Ireland six years ago, Tesco has spent nearly €500m (US$551.5m) on modernising and expanding its network of stores. This year the chain launched an aggressive pricing policy for promotional own-label items which is intended to confirm the group’s position as market leader in Ireland.
Following in the footsteps of their British rival, German discounters Aldi and Lidl made modest investments in the Irish market in 1999. Nevertheless, the two groups, which primarily operate edge-of-town stores, have already achieved a 3% market share, largely at the expense of more traditional supermarkets, and are investing in expansion.
Meanwhile perennial UK high street favourite Marks & Spencer has also made inroads in Ireland, albeit in a small way, with just four stores. Three of these are in Dublin or the surrounding area, and one is in the southern city of Cork. However, the company is about to open a food store at Dun Laoghaire, just yards away from a Tesco store, which indicates Marks & Spencer’s confidence and commitment to the Irish market.
“We are keen to pursue new opportunities in Ireland,” said a spokesperson for the British group, providing further evidence of the unstinting interest that large British retailers are showing in the Irish market.
The Irish market The 1997 entry of Tesco into the Irish retail sector smoothed the path for a number of other supermarket operators and heralded a new era of international competition for Irish retailers. Sensitised by numerous food safety scandals in Europe over the last few years, Irish consumers are extremely concerned about the traceability of the food they buy, and show a preference for locally produced and GM-free food. In this newly competitive landscape, Irish companies are more than holding their own. “Nevertheless, little by little Tesco is gaining the upper hand,” says Rowan Roebig of Retail Intelligence, at the expense of smaller chains “like SuperQuinn, which risks being pushed into the background”. The market could soon get a whole lot tougher if ASDA, the UK subsidiary of US giant Wal-Mart, decides to carry into Ireland the battle already begun in Great Britain to usurp its number one rival, Tesco. |
Irish retail: The main players Musgrave is the leading retailer in the Irish Republic and also accounts for 12% of the market in Northern Ireland. Its expansion into the UK and Spain has made it a force to be reckoned with in the Irish market, with annual turnover of €2.59bn. Dunnes Stores is the second largest retailer in the Irish Republic, and also has a presence in Great Britain and Spain. The company employs 18,000 staff and reports annual turnover worth €1.65bn. SuperQuinn remains a key player in the Irish retail sector and in the outright leader in the greater Dublin area, where it enjoys a 20% market share. Tesco Ireland recently reported annual turnover up 8.5% to €1.66bn. The British giant is reaping the fruits of the massive investment it has made in Ireland over the last five years. SPAR has 360 shops in the Irish Republic and 2,591 in the UK, which together generate turnover worth €3.4bn. |
Catherine Sleep translated this article from the French with permission from its authors, French retail news service CAD.
