‘Fundamental changes’ in market lead to store rebrand

All 24 Superquinn stores across the country are to be rebranded as SuperValu in a major shake-up of the Irish retail market.

The Musgrave Group, which owns both retailers, said the stores will change name from February. Due to the resulting reorganisation in Superquinn’s support office in Lucan, 102 staff will lose their jobs in the next 18 months, with 2,500 staff unaffected.

Given the divergent fortunes of Superquinn and Supervalu in recent years, the rebranding should come as no surprise. Superquinn acknowledged this with a series of tweets pointing to the fact that its sales have steadily declined over the last decade, while those at SuperValu have grown substantially.

“The name change is due to fundamental changes in the grocery market. Our sales declined over the past 10 years and are now 22% off their peak. In contrast, SuperValu has grown by 30% over the last 10 years and achieves annual retail sales of just over €2 billion,” said the tweets.

Much of the reason for SuperValu’s success may lie in its increasing commitment to own-brands. Whereas during the Celtic Tiger, people bought luxury, up-market brands, the recent trends have been towards own-brands and, as a result, discounter stores like Aldi and Lidl. A recent Kantar Worldpanel survey found Aldi, Lidl, and SuperValu were the only retailers to increase market in July, growing to 7%, 7.4%, and 19.5% respectively. Superquinn’s share remained static at 5.4%.

Contrast this with Tesco, whose share dropped from 28.8% for the same period last year to 27.6% this year, and Dunnes, who have seen market share drop from 22.2% to 21.5%.

SuperValu have clearly taken on board that consumers are increasingly going for well-priced, own-brand labels.

In February of last year, it launched its SuperValu Range which included a line-up of over 1,500 products representing a €20m investment for the retailer. This represented the biggest product launch in SuperValu’s history.

The retailer said the range is priced on average 33% less than the brand equivalent, and claimed that by shopping with the SuperValu range, and replacing their usual brand choice with the own-brand equivalent, consumers could cut €45.26 off a shopping basket that would normally cost €110.35.

Speaking about the rebranding move, Musgrave Group CEO Chris Martin said it was “inevitable” given “the realities of a totally changed grocery market and what the Irish consumer now needs”.

“As well as the name change, SuperValu will invest €10m to complete the refurbishment of the Superquinn store network. Shoppers will benefit from an improved, in-store experience, better choice, and value,” he said.

David Berry, director at Kantar Worldpanel, said the rebranding was “a smart move” by Musgrave and said with a rapidly declining share in the market, it was highly feasible that Superquinn could have disappeared entirely.

“A major factor behind its demise is squeezed budgets, which have encouraged shoppers through the doors of discount rivals Aldi and Lidl, both of which are growing rapidly and now account for a combined 14.4% of the market.”

Mr Berry pointed out that unlike many of the major retailers, SuperValu had managed to compete with the discounters and that the merger would increase its strong position in the market.

“SuperValu has recently competed successfully with the discounters, strengthening its position over the past quarter. Musgrave’s merger aligns all the stores within this successful brand.

“As a unified retailer, which as it stands accounts for almost a quarter of the market, Superquinn and SuperValu stores will be in a stronger position to give shoppers what they want — locally sourced, quality products sold at the right price — while also becoming the second largest grocery retailer in Ireland.”