Thursday 19 September 2019

John McGee: 'Dunnes beats them all again in cut-throat sector'

Behind this media-shy and secretive veneer is a finely-tuned family-run retail brand that has an estimated turnover in excess of €3.6bn a year. Stock image
Behind this media-shy and secretive veneer is a finely-tuned family-run retail brand that has an estimated turnover in excess of €3.6bn a year. Stock image

John McGee

Back in the last century, my first proper paid job was in Dunnes Stores in Cornelscourt, Dublin. Long before the N11 ripped through the southside of Dublin, bypassing leafy villages such as Stillorgan, Foxrock and Cabinteely, Dunnes Stores in Cornelscourt was the modern outpost of a growing retail empire that traced its roots back to Cork, where it opened its first store in 1944.

Cornelscourt was then the largest of the retailer's stores and, in many ways, it was Ireland's answer to the out-of-town department stores and malls that sprung up across the USA in the 1960s and 1970s.

Not many people in the Irish retail trade gave the store much chance of success and others struggled to understand why anybody in their right mind would drive to a small village on the outskirts of Dublin to do the weekly shop.

Clearly, Ben Dunne Snr, the founder of the business, knew very well what he was doing.

My summer job was organised by Jim Shields, a neighbour whose son, Kevin, I used to hang out with at the time.

Jim cut his commercial teeth in the retail sector in New York in the 1970s and was regarded as a heavy-hitter in the industry.

When he moved his family from Queens in New York back to Ireland to work with Dunnes Stores, one can only presume that he came armed with some highfalutin' retail concepts that he brought with him from the more commercially sophisticated New World.

I've no idea what became of Jim, but my mate Kevin went on to set up the well-known indie rock band My Bloody Valentine, while his sister Eileen is now a well-known shoe designer whose shoes would probably sit seamlessly alongside other leading fashion designers such as Michael Mortell, Carolyn Donnelly, Paul Costelloe and Peter O'Brien - all of whom design for Dunnes.

The introduction of fashion labels like these, however, underlines the full extent of the transformation which Dunnes has undergone over the last 10 years or so.

To its credit, retail analysts say that Dunnes Stores has never taken the market or its customers for granted and while there may be a lingering perception that it is slow to react to changes in the marketplace, when it does, it does so at scale and often in a manner which often takes its competitors by complete surprise.

The acquisition of Cafe Sol and Whelan's Butchers is a good example. On another level, the retail experience which it now offers shoppers has also been transformed.

Apart from a major redesign of its stores over the past two years, the introduction of designer labels across its clothing and homeware departments and renewed focus on the value end of the market has re-energised the brand in a cut-throat market trying to figure out its future in a digital world.

Down through the years, however, Dunnes Stores and the three generations of the Dunne family who have overseen its growth have always been notoriously secretive and media-shy.

This, perhaps, has added to the allure of its brand. In a very rare interview granted to a young Frank Fitzgibbon (now editor of The Sunday Times) in the early 1980s, the founder of the company, Ben Dunne Snr, responded to every question asked of him with the same answer - "Dunnes Stores better value, beats them all."

It was a hilarious interview that perfectly summed up the retailer's attitude towards the media spotlight and probably set the tone, and indeed the parameters, for much of its subsequent engagements with it down through the years.

But behind this media-shy and secretive veneer is a finely-tuned family-run retail brand that has an estimated turnover in excess of €3.6bn a year, over 15,000 staff and 136 stores in the Republic, Northern Ireland and Spain.

As the recent batch of retail figures from Kantar Worldpanel show, Dunnes Stores has once again regained its crown as Ireland's largest retail brand with a market share of 22.1pc, comfortably ahead of Tesco on 21.5pc.

The retailer's recent run of success, however, had nothing to do with Paul Costelloe or Carolyn Donnelly but rather its ongoing Everyday Savers promotion, a firm poke in the eye of its rivals in the value end of the market, one which has always been central to its business model.

But there are other reasons why the retail brand has survived and thrived down through the years. The retail graveyard is littered with the tombstones of companies that have been bought, managed and flipped by VC and private equity opportunists, often as part of highly leveraged deals or wider property plays.

Family-run retail empires, however, tend to endure, evolve in line with market trends and in most cases thrive simply because they are unfettered by stock market obligations or the financial needs of a VC company.

The Albrecht and Schwarz families who own Aldi and Lidl respectively and, of course, the extended Dunne/Heffernan dynasty who run the show are testament to this.

And long may they endure.

Sunday Indo Business

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