Sunday 25 September 2016

Strong focus on the local defines a retail group that's busy feeding one in four Irish people

Ray Kelly of Musgrave tells John McGee that it's the group's local owner-managers who make the magic happen

John McGee

Published 01/05/2016 | 02:30

Ray Kelly, marketing director of Musgrave Retail Partners, which owns SuperValu and Centra
Ray Kelly, marketing director of Musgrave Retail Partners, which owns SuperValu and Centra

As marketing director of Musgrave Retail Partners, the retail arm of the €4.4bn Cork-headquartered Musgrave Group, Ray Kelly has possibly one of the most demanding marketing jobs in Ireland.

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Responsible for the overall marketing functions of two leading retail brands - SuperValu and Centra - he also has to contend with a highly competitive marketplace that is worth €9bn a year and a consumer mindset that has become used to seeking out value.

With 224 stores, the vast majority of which are owner-managed, SuperValu is by far the largest of the two, with annual sales in excess of €2.6bn. According to the latest Kantar Worldpanel figures, which track market share and grocery spend in Ireland, SuperValu is also the largest supermarket group in the country with a market share of 24.9pc, putting it ahead of Tesco on 23.9pc and Dunnes Stores on 23.5pc. With plans to invest €28m this year in opening five new stores, this gap may widen even further by the end of the year.

For its part, Centra has more than 465 stores, all of which are owner-managed, are a lot smaller in size and occupy a different position at the convenience end of the marketplace. Plans are also afoot to grow its footprint with the addition of another 15 stores this year as part of a €16m investment by the group.

"The difference between the two is that SuperValu is mainly for the big weekly shop while Centra tends to be the local convenience store, but we work to ensure that they have a different positioning in the market and they are not going head-to-head with each other," explains Kelly.

At a time when many of its main competitors continue to play the Irish and local card by stressing how much home-grown products they source or what they are doing for local communities, SuperValu's, and indeed Centra's, Irish credentials have a lot more substance to them, he says.

"Local is very important to us as a brand and a company. The fact that the vast majority of our stores are owner-managed by people living in local communities around the country is very significant. These are the people who provide the magic dust and they have a vested interest in making it work," he says.

He also points out that around 75pc of SuperValu's products are either sourced or manufactured by Irish suppliers, while "local" also means that three times more money is invested back into local communities than would be through an international or other national retail group.

While its local ownership credentials differentiate it from its competitors in a cut-throat market, SuperValu's various marketing initiatives in recent years have also strived to set it apart from the rest of the pack through sponsorship of initiatives that involve local communities. The common thread that runs through them is their local and community focus. These include the hugely successful Tidy Towns competition, which is now the longest running sponsorship in Ireland. It is also a major sponsor of the GAA's All Ireland Senior Championship series, while, regionally, local SuperValu stores are among the top supporters and sponsors of community-based initiatives and local sports teams.

One of its most tangible successes has been the establishment of its Food Academy programme, which is run in conjunction with Bord Bia and local enterprise offices around the country. The initiative encourages small artisan food manufacturers around the country to work with the retailer with a view to becoming a supplier.

Often these are small manufacturers, making products ranging from pesto, jams and chutneys right through to chilled foods such as soups or fish cakes. As part of the programme, SuperValu provides mentoring, training and support to the companies, many of which go on to be suppliers to the wider group.

"By the end of 2015, around 200 suppliers had graduated through the programme and it has led to the creation of over 900 new jobs and combined sales of around €13m. So it's been really successful and by the end of this year we are hoping to increase this to over €20m in sales and over 1,000 jobs. But again, many of these companies are local and there is a good geographic spread throughout the country," says Kelly.

"The initiative originally came from our independent stores, many of which were already sourcing local suppliers. Some were successful, others were not. The reality is that the most dangerous time for small companies is when they start to expand from supplying three or four stores to 26 stores or from 26 stores to over 100.

"All kinds of issues like cash flow and adequate capital to expand arise, so we decided to help these companies by mentoring them and helping them, in so far as we can, to overcome some of these issues. Some companies may decide that it's not for them, and that's fine, while other companies rise to the challenge and have done well as a result," says Kelly.

One of its most ambitious initiatives currently under way is the Good Food Karma project, a €3m-backed programme that aims to change the dietary habits of the nation by encouraging people to eat healthier foods and to take an interest in cooking.

"We see food as a force for change, and as a retailer that probably feeds one in four people in the country, we have a responsibility to ensure that we do our bit in helping create a healthier nation. Why do we do all of this? We genuinely want to build better communities and make a difference to people's lives and if we can achieve this, then of course it's commercially good for SuperValu and the Musgrave Group," concludes Kelly.

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