06 November 2008

Irish Retailers face Sell-Out and Take-Over

Dunnes Stores, one of Ireland's major retail companies, have declined to comment on reports that they are convening senior managers for a significant announcement today.

On Tuesday the Mandate trade union, which represents about 5,000 of the 18,000 employees of Dunnes Stores, called on the company to clarify whether there are plans to sell the company.

Rumours keep spreading in business circles that the retailer, which accounts for around 25% of the Irish grocery market and also has significant clothing and home furnishing operations, might be sold to a foreign company.

Speculations have focused especially on the British chain ASDA as a potential purchaser, which itself is owned by the US giant Walmart.

On Tuesday ASDA dismissed the suggestion that they are planning to take over Dunnes Stores as "market speculation and rumour".

Some market observers have also greeted the reports with scepticism, saying they have seen such stories come and go before. However, others are not that easily put off their scent. There is a certain amount of internal information from Dunnes that was leaked into the communications circles of the Irish retail world, and they have been going around now for a while.

Dunnes Stores, which started their rise to nationwide success in 1944 in Cork, is not the only Irish retail company in the cross-hairs of foreign investors. Only two years ago the even older and more up-market chain Roches Stores - founded by William Roche in Cork in 1901 - was taken over by the British department store Debenham's, although Roches still own the buildings and sold only the retail elements of their business for a total of € 27 million. (If this was a wise move for the UK high street chain is uncertain. They not only took over Roches Stores, they also changed the character and goods range of the shops. Personally I find them now way too selective and way too expensive. The quality of their service has also dropped significantly, with most of the - almost completely female - staff being arrogant and unhelpful if customers are looking for something they used to buy from Roches, but can no longer find in Debenham's.)
The take-over of Irish grocery shops by foreign companies began in 1997, when Quinnsworth supermarkets were bought by the British retail giant TESCO.

The Irish supermarket chain Superquinn, founded in Drogheda, Co. Louth by Fergal Quinn and since his sell-out owned by a group with the meaningless name 'Select Retail Holdings', is also seeking a buyer on the Irish or international market. The Cork-based and Irish-owned grocery company Musgrave, which controls already the SuperValu and Centra chains, has shown an interest in taking over Superquinn for € 150 million.
However, their offer was withdrawn a month ago when it emerged that the current owners - represented by their London bankers Goldman Sachs - were expecting € 250 million for the up-market grocery chain.

There are also take-over rumours hanging over several smaller Irish retail companies, without any concrete information available to analysts yet.

The whole picture looks rather ominous, and one has to ask two questions: Why are suddenly so many of our own retailers, who filled their pocket during the past ten years of boom with plenty of our money, prepared to sell up and get out? And why are quite a few very large international companies interested to invest in Ireland at a time of economic recession and a drop in spending power?

One can of course never be certain about everyone's motives, but it appears that some of the Irish business owners feel that the best times for Ireland are over and it is time to sell up, take the money and run, probably to eastern Europe, where the next economic boom is expected in due course.
On the other hand, international giants like Walmart, who have so far not been represented in Ireland, see the current economic crisis as a welcome opportunity to extend their controlling influence in the retail sector. They are cash-rich and large enough to sit out a recession for a few years, confident that they can make even more profits when the Irish economy recovers again.

Ireland is already full of international chain stores, and their number is rising steadily, with or without take-overs of existing Irish businesses. At the same time more and more of traditional Irish shops are closing down, which is not only a loss for our economy, but also - and even more - a loss for our national identity and cultural diversity.

The Emerald Islander

3 comments:

Anonymous said...

it is a shame that the smaller stores are being shut down. Perhaps you might consider uniting farmers and provide a co-op for fresh vegetables and fruites that are organic. Many are doing that in the smaller communities and people subscribe to be in the co-op. Then they shopping day with a list of what items they can gather. One friend at work beongs to such a co-op and tells that the eproduce is much better than that of the superstores such as walmart, fry's albertson's or safeway. She is quite satisfied that she is not receiving food with hormones of chemicals sprayed on the. I asked her about the quality and she stated that most of the produce is in season and quite lovely. Is that not how food should be gathered anyway by eating what is rich and nourishing while in season. She simply pays 100 dollars for 3 months worth of shopping and goes to that market one day on the weekend.

Anonymous said...

I work in Dunnes Stores head office. The rumour and speculation started when some key store managers were told to attend a meeting in head office with Margaret Heffernan. That is the only fact. Everything else stemmed from that as the store managers were not told the agenda of the meeting. The story quickly started to grow legs - there was to be a "big announcement". Then there was to be an announcement that the Dunnes/Heffernans/McMahons were selling out. Then that the buyer was WalMart/ASDA. None of it is fact. The only reason that Dunnes did not respond to the rumour is the same as always - the family do not air much in public.

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