Business Irish

Sunday 21 January 2018

The resolve of the Dunnes siblings should not be underestimated

Dunnes Stores has been busy expanding its offering
Dunnes Stores has been busy expanding its offering
John Mulligan

John Mulligan

Dunnes Stores has spent tens of millions of euros - perhaps even over €100m at this stage - to get shoppers through its doors.

By offering customers €10 off for every €50 they spend, its generous voucher deal has done what it was designed to do. But previous anecdotal evidence from insiders has suggested that when Dunnes turned off the voucher tap, that it was noticing a marked fall in sales at stores.

It's easy to wonder if it has got itself into a vicious, rather than virtuous, circle.

And that long-running money-off campaign must certainly have dulled profits at the notoriously secretive retailer that's headed by Margaret Hefferan and her brother, Frank Dunne.

But it seems to be the price they're prepared to pay to regain Dunnes' footing.

Coupling that strategy with a push towards providing shoppers with fancier goods could also help it to retain customers who might otherwise have gone elsewhere if not for the vouchers.

And Dunnes has been busy expanding its offering.

Last year, it bought the small, Dublin-based coffee chain Cafe Sol, with a view to opening outlets in its busier stores around the country.

Earlier this year, it bought Whelan Food and Meat Processors. The business was owned by Pat Whelan, a renowned Tipperary butcher, with the firm having concessions in three Avoca stores. It would have been unthinkable a few years ago that Dunnes would have chased the kinds of shoppers who'd be willing to splash out on refined products such as those that Whelans offers.

But it takes a long time to change mindsets and images (unless you happen to be Ryanair, it seems).

Dunnes could do it, but it can't alienate its traditional customer base.

The person who does his or her shop at Dunnes probably isn't the same person who could just as easily opt to pop into M&S for the bulk of their groceries.

So knitting together a coherent strategy, rather than cobbling something together and hoping it will work, will be hugely important if the notoriously media-shy Dunnes is to chase a different kind of shopper while holding on to its core.

Margaret Heffernan and Frank Dunne are no doubt eyeing a return to glory days. Being number one in Ireland is surely their goal. If SuperValu can beat Tesco and do it, then surely Dunnes can too, they probably figure. The last thing they'll want is a pyrrhic, short-lived victory that costs a fortune.

Both are also no doubt keenly aware of the advance of time. Margaret Heffernan turned 74 back in March. Frank Dunne will be 73 this month.

It may still leave them with many years at the helm, but may also have focused their minds on their legacy at Dunnes Stores.

They surely will not want to leave the ship gliding behind SuperValu and Tesco.

And one thing is certain: despite Dunnes being in third position on the podium, the resolve of the siblings to make it number one should never be underestimated.

Irish Independent

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