Creating ‘an unrivalled Irish retail brand’
Now that the flurry of Superquinn reminiscence has died down, Gillian Hamill spoke to Musgrave CEO Chris Martin about the wider implications of the move for the SuperValu group
Print10 September 2013
‘So far, so good’ appears to be the message emerging from the Musgrave Group following last month’s announcement that Ireland’s 24 Superquinn stores will be renamed under the SuperValu banner by February of next year.
Indeed, the latest supermarket share figures from Kantar Worldpanel in Ireland, published for the 12 weeks ending 18 August, paint a positive picture for the Irish group. According to commercial director David Berry: "SuperValu has performed strongly over the summer period, attracting new shoppers through the door and seeing them spend 60c more on each trip. This has helped boost its share from 19.5% last year to 19.8% now with sales growth of 3.1%.
No negative effect
"Interestingly, there has been no negative effect for Superquinn following the recent announcement that the stores will be renamed as SuperValu, with sales and market share remaining in line with last year."
SuperValu managing director Martin Kelleher said of the results: "As the best performing grocery retailer outside the discounters, we are pleased with the latest figures from Kantar which shows that SuperValu sales grew by just over 3%, double that of the market…The summer saw an excellent growth in sales which can be attributed to our fresh food credentials. For example, we saw a 300% increase in BBQ meat sales, a 65% increase in strawberry sales and a 65% increase in the sales of salad bags on the same period last year.
"In 2012 SuperValu achieved annual retail sales of just over €2 billion, and our strong market performance is indicative of the trust placed in us by consumers all over the country."
Reliving the past
Perhaps unsurprisingly though, the name change announcement created much reflection on the halcyon glory-days of Superquinn when retail supremo Feargal Quinn headed up the chain. However, its more recent, less glorious past was largely glossed over.
As ShelfLife‘s editor Fionnuala Carolan reported at the time, when it was announced on 22 July 2011 that Superquinn had been placed in receivership by Allied Irish Bank, Bank of Ireland and National Irish Bank, it wasn’t a huge surprise. Rumours had been circulating for 18 months that all was not well in the business and that the group of property developers, namely Select Retail Holdings, that had bought the company from founder Feargal Quinn in 2005 for € 420 million, were keen to wash their hands of it. In fact, the supermarket was more than € 400 million in debt to the banks. Of these debts, a massive € 275 million was property-related.
Securing positive PR
Musgrave was often touted as the most likely buyer and when the receivership did come about, most were happy to hear that Musgrave, an indigenous Irish company would take over Superquinn rather than a foreign multinational.
Musgrave further benefitted from positive PR and goodwill when it pledged to make a fund worth € 10 million available for the unpaid Superquinn suppliers who didn’t have trade insurance when the supermarket entered receivership. Overall, the Musgrave Group paid € 229 million to acquire the business and has invested € 15 million in Superquinn to date with another € 10 million earmarked to improve its stores and product offering.
Feargal Quinn speaks out
Superquinn founder Feargal Quinn also appears to have given the name change his blessing. Speaking to The Irish Times, he said: "From my point of view, I’m happy that it lasted 53 years. I would have loved the name to have stayed for another couple of hundred years but you don’t win them all and I think that Musgrave know what they are doing. It’s eight years since I left so it’s no longer my baby."
But while much of the public conversation surrounding the move on social media networks such as Twitter focused on nostalgic ‘Superquinn sausage banter’ in the immediate aftermath of the announcement, ShelfLife spoke to CEO Chris Martin to take a deeper look at the ramifications of the name change for the SuperValu business, including the reported 102 job losses from the Superquinn Support Office.
SL: Were you surprised by the extent of the outpouring of affection for Superquinn products that occurred on social media networks such as Twitter?
CM: No, we understood that customers would be sad to see the Superquinn name change and would fear losing some of their favourite products. We did our homework to ensure that our plans included keeping the products that made Superquinn their supermarket of choice. It was heartening to see that all of the key products named on the day [of the announcement], were already part of our future plans.
We also worked extremely hard proactively engaging with our colleagues, our customers and the general public on Twitter and Facebook, to reassure them that their stores would retain not only the staff they have grown to know, but also the best-loved products such as Sean’s Brown Bread, the steaks and of course, the Superquinn sausage. In fact, we are planning to take the Superquinn sausage nationwide through our full network of SuperValu stores.
It was also reassuring to receive comments from customers congratulating us on the inclusive approach we took to social media. Lots of them were delighted to see that we were keeping their favourite products, but were also excited about the various new elements SuperValu would bring to their store, such as the SuperValu range of over 2,000 own-brand products.
What departments did the 102 job losses involved occur in? Did this move affect senior colleagues?
We regret that a total of 102 positions in Superquinn Support Office will be impacted. The Marketing, IT, QA, Finance, HR and Operations teams across all levels in the Superquinn Support Office will be affected. We will do all that we can to help affected colleagues find positions across the Musgrave Group as well as providing out-placement support to assist them in finding alternative employment.
Where do you believe potential new roles could be located within the company?
It is too early to identify these new roles specifically right now. However, if we are to look at the areas affected, we may see opportunities in these same disciplines such as trading and marketing in our other businesses, across the Musgrave Group.
In addition we have set up a resourcing hub where colleagues can view all the open vacancies across the group and we have established a comprehensive outplacement and support programme to assist colleagues as necessary.
Superquinn has traditionally had a strong presence within the Dublin market. Will this provide an important advantage for SuperValu in terms of expanding its presence within Dublin?
Yes, the name change will help to strengthen SuperValu’s position in Dublin and really extend our footprint in the region. We already have some fantastic stores in the capital and greater Leinster area and we will be able to leverage the momentum we are seeing behind the SuperValu brand to great advantage. Outside of the discounters, SuperValu is the only grocery retailer to have grown market share, which clearly demonstrates that the SuperValu offer is really resonating with Irish consumers and now we can bring this offer to an even wider audience. We are really looking forward to the challenge.
Has this been a move SuperValu has been considering for some time?
The decision to change the brand follows a considered review of all options. We now believe that combining SuperValu and Superquinn is the best option to create a sustainable future for Superquinn, while also creating an unrivalled national Irish retail brand. It will bring the value of SuperValu nationally while maintaining all that shoppers love about Superquinn.
SuperValu operates under a franchise model. Will this also become an option for the former Superquinn stores – will retailers have an opportunity to become owners in the future or will the stores continue to be run under their current model?
All stores will remain under Musgrave Group ownership and operate as a separate business, similar to our other group retailers such as Pettitts, and we have no plans to sell the stores.
Why did you feel the name change was necessary given that Kantar Worldpanel reported in April of this year, that "things have started to look up for Superquinn" with 1.9% growth "driven by people buying more items each time they shop at Superquinn, with fresh and chilled foods proving particularly popular"?
The truth is that this change is necessary for the future success of the business. Despite the recent improvement and stabilisation of sales, Superquinn has experienced 10 years of sales decline, with sales 22% off their peak. The Superquinn business in its current setup was unsustainable and the boost in sales required is simply unrealistic in a fundamentally changed grocery market. This is due to the dramatically changed retail landscape, with consumers demanding better value and the intense increase in competition.
Colleagues and customers have seen how historical under-investment had damaged the business. Since the acquisition, Musgrave has made significant investments in improving the stores and the value on offer to customers. We are set to continue this investment, expecting to spend € 10 million on stores refurbishments in the next 18 months, to continue to create a profitable and sustainable business.
Over the past 10 years, SuperValu has grown by 30%, achieving annual retail sales of just over € 2 billion. With the addition of Superquinn, one in four Irish consumers will shop at our expanded network of 222 stores.
Do you foresee any competition issues with the name change?
No, as the decision does not introduce any structural change to the market. Musgrave Group has owned Superquinn since 2011.
Will the changes lead to greater efficiencies/economies of scale within the Musgrave Group?
We will be able to take advantage of the large investment we have made in the SuperValu own-brand range, which has proved extremely popular with consumers. In addition we will be able to leverage SuperValu’s sponsorships like the GAA All-Ireland Senior Football Championship and the SuperValu Tidy Towns competition in order to engage consumers. Any cost efficiencies secured as a result of this decision will be passed on to our customers in the form of cost savings and we will continue to make significant investments in the business.
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