ESM: European Supermarket Magazine is proud to launch 'The A-Z of Retail', a new subscriber-only series that offers a deep analysis of the retailers, suppliers and individuals making the news each week. Today: D is for Dunnes Stores.
In Irish retail circles, there’s a longstanding expression that sums up just how important Dunnes Stores is in the eyes of the consumer: “If Dunne can’t do it, it can’t be done.”
And as the latest Kantar Worldpanel market share figures for the Irish market attest, that deep-rooted loyalty to arguably the country’s finest homegrown retailer isn’t going anywhere.
According to the data for the 12 weeks to 31 December 2017, Dunnes Stores, or just ‘Dunnes’ as it is know in local parlance, sits on 23.0% market share, 20 basis points ahead of industry giant Tesco and 60 ahead of Musgrave-owned SuperValu, another domestic success story.
Elsewhere, while Aldi (10.3% share) and Lidl (10.4%) are a growing force in Irish grocery, their combined market share still falls short of the Dunnes’ juggernaut.
What makes Dunnes Stores performance all the more impressive, however is that its position at the top of the Irish retail tree has been achieved with practically no new store openings in recent years.
Rather, store refurbishments, such as at its Cornelscourt flagship in south Dublin, have driven sales growth, as has a quite remarkable long-term promotional strategy - customers that spend €50 in its stores receive a €10 voucher to spend somewhere else.
It’s customer-focused initiatives like this that have been part of Dunnes Stores mantra since the company’s inception, some 74 years ago.
Deep Roots
The story of the Irish staple retailer Dunnes Stores is woven deeply into the fabric of Irish life.
The business was founded by Ben Dunne, a young entrepreneur, from Rostrevor, Country Down. Like many Irish people of his time, he was saving to go to America when, in 1926, a local businessman realising how talented he was, arranged an apprenticeship for him in a local drapers.
Later, moving south to Cork, he became the head buyer at Roches Stores, Cork’s biggest retail business. When invited to take over the whole buying operation, Dunne asked for a salary increase. He was refused and told he would then be paid more than the directors.
It was at this time, 1944, he decided to invest his life savings in a shop in Cork, offering quality clothing at pre-war prices. The store was an instant success.
In the 1960s, groceries were introduced to Dunnes Stores for the first time; again offering better value than any of its competitors. 'Dunnes Stores: Better Value Beats Them All' was the company's mantra for years.
Current Ownership
The business is still run by the Dunne family, although the inner workings of its leadership remain notoriously intriguing and opaque.
Over the past decade, the retailer has slowly and quietly redefined itself as an upmarket retailer in fashion, food and homeware under the leadership of Ben Dunne's eldest daughter, Margaret Heffernan.
Strongly anti-union, hugely committed to the family business and the consumer, she is very much the matriarch of the Dunnes dynasty.
In September 2017, Margaret appointed her daughter, Anne, and her niece Sharon McMahon as directors of all Dunnes Stores companies, leading many to suspect that the evergreen Heffernan was ready to pass the torch to the next generation. But these two 40-something professional women, one a doctor and one a solicitor, had to the earn their stripes before being appointed to the board.
While Dunnes Stores, a family-run business, doesn’t publish its annual sales performance, the annual Irish Times Top 1000 list suggests that the retailer had an annual turnover of €3.5 billion in 2016, with 14,000 employees.
The Dunnes family, meanwhile, is very wealthy by world standards, The British-based Sunday Times Rich List places the family as having a combined net worth of €1.62 billion.
When you extrapolate the net worth of the Dunnes family, based on the size of the market in which the group operates, to that of the mega rich owners of Aldi, Lidl and Walmart and their respective markets, that figure is all the more impressive.
A Store For the Future
The Irish grocery market is more competitive than ever before - while in years past, Dunnes had to compete against the likes of local legends Quinnsworth and Superquinn, today it finds itself up against international giants that have no shortage of competitive nous.
Having honed its product selection, Dunnes Stores has upped the ante when it comes to store design at some of its flagship locations.
The revamp of its store in Cornelscourt over the last year is a prime example, incorporating bespoke designs from the international store design company Schweitzer.
Its stores in Stephen’s Green Shopping Centre and on Grafton Street in Dublin’s city centre also boast sleek minimalist interiors, as well as a restrained approach to display in the clothing section - and are arguably some of the best-designed stores in Europe.
Industry Speculation
As Dunnes Stores has grown, so it has regularly been mooted as an acquisition target, with the likes of Asda, Sainsbury's and others linked with a move for the chain - which heretofore has rebuffed any approaches.
But with Heffernan now in her 70s, and a new generation set to take the helm, is Dunnes once again a possible target for a major international player? And if so, what would it be worth?
At the forthcoming Checkout Conference, Dr Clive Black of Shore Capital, probably the most influential analyst in the UK and Ireland, will offer his appraisal of the challenges and opportunities of the Irish grocery market, and look at Dunnes's strengths and weaknesses, and its possible attraction to outside buyers. Click here for more information on how to attend.
But in the meantime at least, as we look ahead to a new year, Dunnes Stores will be looking to continue to build on its momentum - after all, as Irish consumers have understood for generations, nobody gets things ‘done’ like Dunnes.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Kevin Duggan, Stephen Wynne-Jones and Kevin Kelly. Click subscribe to sign up to ESM: The European Supermarket Magazine
