Much-loved chain just could not shake off its upmarket tag – a real problem in the recession
THE NEWS that the receivers have been called in to Superquinn will be greeted with shock and sadness by many Irish people who have held an affection for the retailer almost since the moment the ebullient Feargal Quinn opened the doors of his first shop in Dundalk in 1960.
Thanks to its media-savvy founder – who consistently emphasised the importance of customer service and quality above almost everything else – Superquinn grew into more than just another place to do the weekly shop.
However, good vibes aside, it has struggled in the brave new world of Irish grocery retailing.
This new world is one in which Tesco has been able to go from nowhere to undisputed market leader in a decade and one which has seen the German retailers Lidl and Aldi convince some initially dubious shoppers of their discounted and sometimes bizarrely eclectic charms.
It wasn’t just the presence of canoes and blowtorches alongside the cornflakes which won people over to the discounters – their growth was also aided by a huge shift in the economic fortunes of many which forced them to be a lot less picky about where they bought their groceries.
While it will continue to trade as normal and although the receivers have expressed confidence that they will be able to sell it as a going concern, it may well be the end of the road for the Superquinn that has won a place in people’s hearts.
There may be shock and there may be sadness but there can’t be much surprise. Much to the concern of its 2,800 employees, it has been the subject of ongoing takeover speculation for more than two years, with Sainsbury’s, Waitrose and Asda often identified as potential overseas buyers and Dunnes Stores and Musgraves touted as the most likely local suitors.
It repeatedly denied it was for sale but keen market watchers were unconvinced and the rumours persisted.
It’s not long since the last takeover. Quinn, displaying remarkable prescience, sold it for about €450 million to Select Retail Holdings more than five years ago. Almost as soon as the ink dried on that contract, the difficulties started.
In 2009, it shed 400 jobs and closed a store in Dundalk while in February it announced it was to close its Naas branch with a loss of 100 jobs. It has also lost a host of senior executives in recent months including its chairman Simon Burke.
The most recent Irish grocery market share data published by industry analysts Kantar Worldpanel covers the 12 weeks up to April 17th. It painted a deeply troubling picture for Superquinn.
Lidl and Aldi – the fifth and sixth largest retailers in the State – performed strongly as did top dog, Tesco. The market share of Dunnes and Supervalu was steady but Superquinn suffered and saw its sales fall by 5 per cent and its market share fall half a point to 6.4 per cent. This put it in real danger of losing its top-four slot.
Despite Quinn’s mantra that quality and customer service were key, it looks like it has ultimately come down to hard cash. Select Retail Holdings is said to be saddled with debts of €400 million. It has struggled to overcome the perception – which is not always borne out by reality – that their supermarket is the upmarket choice.
While such a label was all well and good during the good times, in an increasingly price-sensitive Ireland, such a tag was the last thing any supermarket needed.
MUSGRAVE GROUP EMERGES AS LIKELY BIDDER
CORK-BASED Musgrave Group, which has emerged as a likely bidder for Superquinn, is better known for its franchise convenience-store brands, which include Centra, Londis, Mace and Supervalu in Ireland, and Budgens in Britain. It also has a a cash and carry business in Spain. Founded in 1876, the company claims to be Ireland’s biggest grocery distributor. It is controlled by members of the extended family of its two founders, brothers Thomas and Stuart Musgrave.
The group reported sales in 2010 of €4.4 billion, and it made a profit before tax of €72 million. It had €21 million in cash at the end of 2010 and an operating cash flow of €135 million. The group’s net assets were €432 million.
The shareholders’ register shows directors Stuart and Peter Musgrave and various members of their family hold more than 23 million of the group’s 59 million or so shares. Peter Musgrave holds 8.5 million shares, 6.5 million of which he controls through a company called Ardbrack Holdings. The Mackeown family, including director Philip Mackeown, owns 4.8 million shares. Chairman Séamus Scally has just over one million shares.
