The difference is…we’re silent?

Dunnes Stores' HQ in Dublin

At a time when the average basket spend stands at just €21.30, one might presume that the country's major grocery retailers are all busy ferociously cracking the whip within their PR departments to secure maximum press coverage. All apart from one that is. Gillian Hamill examines the cost to Dunnes Stores of constantly repeating the group's two favourite words: "No Comment"

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SuperValu has welcomed the announcement of own-brand contracts worth more than €80 million with 104 Irish suppliers. This is just one of the many snippets of grocery-related information any member of the general public could have learnt simply by perusing the country’s national papers over the past month. But what of Dunnes, the supermarket that traditionally boasted ‘The difference is we’re Irish’? Surely its PR army has been out in force to ensure the retailer’s Irish credentials have been splashed all over the papers? Well, no actually. The reality is that if any shopper wanted to find out anything about Margaret Heffernan’s retailing empire then they’d have to bypass the editorial content and direct their eyes towards a paid-for advertising supplement that will have cost the group a pretty penny.

An ‘unusual’ media strategy

Unfortunately, Dunnes Stores’ interaction with the media leaves a lot (and by a lot, we mean everything) to be desired. As The Irish Times‘ consumer affairs correspondent Conor Pope tells ShelfLife, the group’s media strategy isn’t quite what one would expect from the country’s second largest grocery retailer.

"Dunnes Stores has a very unusual media strategy, in that it has absolutely no media strategy at all," says Pope. "It has a policy of never responding to media queries – even queries which show the company in an incredibly positive light. Not once in the seven or eight years I have been putting questions to Dunnes Stores have I got so much as a ‘no comment’ out of them. 

"While retailers such as Marks and Spencer, Superquinn, Tesco and SuperValu have big PR departments – or agencies doing their bidding – and will address customer concerns which are routed through this newspaper, Dunnes Stores seems perfectly happy to ignore every single complaint or request for information.

"The strategy is ridiculous and almost obsessively reclusive and means that the store never gets its side of the story heard. It also creates the impression that the company does not care about what its customers – the people who keep it in business – think about how it operates.

"The reality is it does care. And sometimes it takes criticism very badly indeed. The only communication I have ever had from Dunnes Stores was when one of its senior executives contacted me out of the blue to complain about a review which featured one of its own-brand products. I described its own-brand cheese slices with the single word ‘yuk’ which management at the very highest level took grave exception to.

"I was surprised by the call but it was nice to know the store was reading what I wrote. And they didn’t have a leg to stand on with their complaint. The cheese was definitely yuk."

Unappetising cheese slices aside, it’s clear that Dunnes couldn’t have achieved the status it has acquired today without caring about its customers’ opinions. This makes it all the more surprising that a retailer of its size doesn’t have dedicated press representatives to do its bidding. Undoubtedly this policy saves the group a great deal of time and money – a simple "no comment" is a whole lot cheaper than devising a coherent, interesting response to journalists’ many queries. So are Dunnes’ rivals actually missing a trick by shelling out for PR instead of concentrating solely on advertising spend?

Obviously, this question is impossible to answer fully without a complete cost-benefit analysis. Yet the evidence would suggest that prudent PR more than pays for itself in creating a positive customer impression. In saying that, perhaps a non-existent PR presence would be justifiable if Dunnes’ sales were currently streets ahead of the competition. But this simply isn’t the case.

Declining market share

The latest supermarket share figures from Kantar Worldpanel show that of all the multiples, Dunnes has experienced the largest market share decline of 21.4%. In comparison, Tesco and SuperValu both posted moderate sales growth of 2.4% and 0.4% in the past year. Even more impressively, Aldi achieved sales growth of over 28%, lifting its share of the market from 4.5% to 5.9%.
Undoubtedly times are hard for all FMCG retailers, with Kantar’s figures also showing the overall grocery market has fallen by 0.6% during the past year. "Shoppers are reducing their spending by adopting a ‘little and often’ approach to shopping trips, which is helping them to limit wastage as they only buy what they need when they need it," says Kantar Worldpanel commercial director, David Berry.

So at a time when retailers are appreciative of every extra few cents spent by a customer in their stores, to borrow its rival’s slogan, wouldn’t it be wiser for Dunnes to believe "every little helps" when it comes to blitzing the press?

Advantages of good press

While the benefits of PR may be difficult to quantify in monetary terms, the upward trajectory of Lidl – still the largest German discounter operating here – provides a potent example of the power it can exert. In September 2008, ShelfLife published an article entitled ‘The Scarlett Pimpernel – Lidl’s secret society amid a sector under scrutiny’. At the time, the journalist who wrote the piece made several attempts to contact the discounter but to no avail. Yet shortly before going to print, ShelfLife‘s former editor Caroline Byrne unexpectedly received a full response to her queries. Back then, it was rumoured – although it hadn’t as yet been confirmed by the company – that Lidl was set to employ dedicated press personnel. Not long after, press@lidl.ie began sending regular updates. The group’s u-turn was correctly perceived as a sign that one of the most secretive operators within Irish grocery was set to open up. Since then, Lidl has proceeded to expand its market share to 6.7%. A fortuitous coincidence?

It’s clear a desire for value is the driving force guiding Irish consumers towards the discounter aisles. But no doubt the discounter’s willingness to inform consumers of its relationships with Irish suppliers has helped reassure the country’s ‘yummy mummies’ and ‘ordinary joes’ alike, that it’s not some sort of ethically dodgy foreign bogeyman, but a respectable place for people to be spotted browsing the aisles by their neighbours.

Ambiguous positioning

So what could Dunnes do to stay ahead of competitors hungry for a bigger slice of the market? Its current motto of "Always Better Value" is obviously fitting for today’s economic times but does it also need to do more to keep its quality and Irish heritage front of consumers’ minds? Cliona Lynch, senior research analyst with Verdict, believes Dunnes would be better served if it focused on these messages rather than attempting to slug it out with the Germans in the fierce battleground that is discount retailing.

"Dunnes’ positioning is ambiguous in a market where discounters control the value end, Tesco continues to innovate and both SuperValu and Superquinn resonate on food quality and provenance," says Lynch.

"The growth of discounters means that the low price battleground is commanded by Aldi and Lidl. Shoppers who prioritise price are finding discounters increasingly convenient, as their store numbers expand, and increasingly competitive on range and quality, as the product offer improves and adapts to Irish tastes. With a nationwide presence, Dunnes will be under threat of losing share to every new discounter that opens.

"Where Tesco and Supervalu have differentiated their offer through a broader range and a provenance appeal respectively, Dunnes has struggled to choose between these avenues. Pushing both its Irish heritage and its "better value" message has led Dunnes to fall into a middle ground which has been vacated by shoppers. Dunnes needs to innovate in product ranges and communicate a stronger food quality and provenance message if it is to compete with SuperValu and Tesco. Attempting to fight it out with the discounters at the value end of the market will be a much bigger challenge, and one that will alienate a more quality focused shopper, leaving Dunnes less options to gain share."

Shouting about Irish heritage

Branding and marketing expert Pat Kinsley, MD of Neworld Associates, likewise believes Dunnes should shine a spotlight on its Irish heritage. "Out of all the players in the current marketplace Dunnes Stores has the ultimate right to shout about its Irishness," he tells ShelfLife. "After all it is the original family run business."

In his view Dunnes would have much to gain from becoming more media friendly. "It seems that Dunnes Stores are losing share due to their policy of keeping it tight," he notes. "They have always had a boardroom mantra of keeping quiet. They have never taken part in any statistical research nor have they gotten involved with the industry with regards to shared information. This type of personality might be the one thing that will finally let them down."

Deciding on a point of difference

From meetings held with the retailer in the past, Kinsley says the group perceives itself to be "a sort of follower leader. What I mean by that is that they always watched what the others were doing and then emulated that strategy themselves". In the past this focused on following Marks & Spencer and in one instance this was justified by a Dunnes representative on the grounds that: "We are not innovators, we are great imitators".

 While great imitation may be the group’s guiding principle, nevertheless the priority for Dunnes now is to "realise what their point of difference is and stick to it", says Kinsley. "The brand has never stayed for any length of time on one mission. Even their famous line "Better value beats them all" has become totally diluted. This was their fighting call. It is probably the most memorable line of all time on the Irish marketing scene."

The best option in Kinsley’s view would be for Dunnes to "re-position themselves as an offering that works with people to offer them the quality that they deserve at the prices that they can afford. This type of positioning would also help consumers to start going back to one place to do all of their shopping".

A huge opportunity

With people now increasingly shopping around and purchasing basics and treats in different stores, Kinsley believes this represents "a huge opportunity for someone like Dunnes. The one thing that they have to remember is that the majority of their operations have both food and textiles under one roof. Their only main competitor in this opportunistic space would be Tesco Extra and everyone knows that they are not Irish."

A better relationship with the media could well prove an important first step in cementing this new position. "This is a gift waiting to happen for Dunnes," says Kinsley. "If they could only just change this one aspect of their personality it could open up so many new doors for them.

"If they had a new business plan, a new strategy and a new message for the people, the media could give them a great stage to sing their song. This would allow them to rekindle that institutional stance that they once held with the fabric of Ireland. It would get them back into the homes and more importantly the hearts of the nation. But the message has to be right and above all sincere."

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