Is a UK expansion on the cards for Dunnes Stores?
The UK retail industry is in a period of tentative growth, and Dunnes Stores may well be planning an invasion. But how can they tell when the time is right?
31 July 2015 | 0
Competition within the retail and grocery industries is one of the most closely-watched and analysed of them all, given that the stakes are so high and a company’s fortunes can change overnight. In both Ireland and the United Kingdom, the grocery market shares are won and lost on a tenth of a percentage, which is why there’s a considerable amount of surprise and curiosity at the news that Dunnes Stores are rumoured to be considering an expansion of their UK operation.
According to a lively report in The Irish Times, speculation is rife that the retailer, headed up by legendary chief executive Margaret Heffernan, is planning to open up to 40 new stores across the Irish Sea, using the opportunity presented by Marks & Spencer and BHS’s plans to offload a large portion of their properties.
Experts call this plan – if it does indeed come to fruition – a major risk for Dunnes, one of the biggest “strategic pivots” in the company’s 70-year history.
Dunnes already has 23 stores in Northern Ireland, five in Scotland and six in the North of England. Added to its 120-plus Irish outlets, if the rumoured 40-store expansion takes place, the company’s overall estate would swell by more than a quarter – a massive amount to take on all at once, even for a veteran like Heffernan.
As for the specific area, analysts say it would be “commercial suicide” for Dunnes to wade in to the “war zone” that is the UK grocery market. Instead, it would be wiser for Heffernan to focus on the company’s non-food offering such as clothes and homewares. While the intense competition in grocery has the market in decline, other areas are enjoying a period of growth, and there may be room for Dunnes to swoop in and take up some of the new slack, particularly in the north and west of Britain.
No matter how enticing the opportunity though, it would certainly be a rough ride for the company. Watch this space.