Musgrave: Our family structure gives group edge over listed firms
The family owners of Musgrave Group are better able to make long-term decisions than a stock market-listed PLC that is "constantly being marked up or marked down by analysts", according to the retail giant's vice-chairman.
Chris Musgrave gave a keynote speech at DCU's 'Family Business Values' conference yesterday, providing rare insights into the tightly held group.
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Musgrave's assets include SuperValu, Centra, and Donnybrook Fair. It has been controlled by the same family since its foundation in Cork in 1876 and today it is the largest private employer in the State, with 35,000 staff. Profits in 2017 were €80m profit and turnover was €3.7bn.
Today, 132 members of the extended family own 78pc of the shares through a company structure.
Mr Musgrave said that in 2000 the family held a meeting in a Cork hotel and agreed "a few basic principles" - including that the group would be "family governed and professionally managed", is ethical and considerate towards stakeholders, and "provides shareholders with a better return over time".
After two-and-a-half years this developed into a more formal family constitution.
"The constitution is the guideline for us if the family want advice," Mr Musgrave said. "It is a live document, updated every three years that is not legally binding. We also have a family council that meets twice a year."
He said the one thing that does not get discussed in family companies generally is spouses, who he said may not realise they are marrying into a business.
Part of the group's success during the recession, Mr Musgrave said, was that it "stood by our retailers". "To my mind that's what long-term stable relationships mean. As a result, we grew market share through the recession."
In addition, he feels the group benefits from the share-ownership scheme that involves employees. Under the scheme, staff that have been with the Musgrave Group for a minimum of three years can buy shares in the company.
"One of the cornerstones of our business has been the employee share option, it is something that, if I was not part of the family I would want to work for a business like that, where we all benefit."
When discussing SuperValu's expansion into China - the group started exports to the Asian giant in 2016 - Mr Musgrave described the Chinese market as "tough".
"We have a large market share in Ireland, and we went into China two-and-a-half years ago on the Alibaba [ecommerce] platform, and you realise the scale that's out there in China," he said.
"Jack Ma - co-founder of Alibaba - came up with Singles Day in China. In one day it did $25bn of business in China. You have to say 'what else is out there' so we are sending our 'Signature Range' out there. It is tough there, you need a partner," he added.