How the supermarket sweep took over Ireland's grocery sector

The first Dunnes Stores opened in 1944, Tesco arrived in 1997, and the German discounters followed soon after. Some, like Superquinn, have fallen as the market leaders eye continuing growth post-pandemic
How the supermarket sweep took over Ireland's grocery sector

Over the last year, the average household grocery bill has increased by €1,000.

Grocery shopping has been a key feature of our lives for the last year.

Once mundane, the trip to the local supermarket has become as much a social event as a necessity.

Supermarkets were among the few retail outlets able to keep their doors open since the pandemic hit. They became a focus point as people initially sought to panic buy. Then came the rush to get a slot for online grocery deliveries.

For the first time, we had to queue outside to get access and struggled to find a coin for the trolley, as we didn’t have change anymore in our pockets. As unlikely as it seemed, supermarkets became social outlets — a place to go to get out of the house for a while.

At a time of great upheaval, there was the one constant — the doors of the likes of Dunnes Stores, SuperValu, Tesco, Aldi, Lidl stayed open. As clothes shops, hairdressers, and beauty salons opened and closed, the supermarkets were deemed essential.

They could keep the doors open. They simply had to. When it comes to heroes from the pandemic, the supermarket workers and operators have flown under the radar somewhat. They showed up day in, day out to keep food on the shelves and make sure we could keep our fridges stocked.

As shoppers, we were spending more too. Over the last year, the average household grocery bill has increased by €1,000. Irish shoppers have spent an extra €2bn on take-home groceries since the start of the pandemic, according to retail analysts Kantar.

The pandemic may have brought this sector into focus but supermarkets have been a major force in society for many decades now.

Before Covid struck, supermarkets were gradually changing small aspects of how they operated. Like many things over the past year, how we shopped has changed but the changing nature of how we are shopping has been evolving over the years. Supermarkets are still based on the same concept as when they first opened. Fill your trolley with items you need and pay at the till. However, how they interact with customers is constantly evolving.

When it comes to the history of supermarkets we can see how some of those who started out in the early days are still around in some way or other.

In the beginning...

A man named Ben Dunne was working in Roches Stores in Cork in the 1930s, a place where he met his wife of 44 years, Nora. As the story goes, when he was refused a pay rise at Roches Stores, Dunne left to set up on his own. In March 1944, he used his savings to open the first ever Dunnes Stores on St Patrick's Street, selling clothes only. At the time, Dunne said "Anyone could have done what I did — but they didn’t do it. That’s the only difference."

Crowds of bargain hunters flock to Dunnes Stores, St Patrick’s Street, Cork, for its annual sale in 1955. It was the first Dunnes Stores in the country, having been set up in 1944.
Crowds of bargain hunters flock to Dunnes Stores, St Patrick’s Street, Cork, for its annual sale in 1955. It was the first Dunnes Stores in the country, having been set up in 1944.

He continued to open more stores and only introduced groceries in 1960, at first just boxes of apples and oranges. And the rest, as they say, is history.

In those early days there was little competition in the supermarket sector but things would change quite quickly. Musgrave Group, which owns the SuperValu and Centra franchises, introduced the larger grocery store format in the 1960s.

Pat Quinn went on to start Quinnsworth in 1966. He later sold it to Power Supermarkets but it continued to trade as Quinnsworth. They were well known for their low-cost Yellow Pack range. The Ryanair model of its time. 

Within the Quinnsworth group was a store called Crazy Prices which was the first outlet in Ireland to offer late-night shopping. In 1997 Quinnsworth was bought by UK giant Tesco, marking its entry to the Irish supermarket scene. 

The Quinnsworth and Crazy Prices stores were rebranded as Tesco Ireland over the next few years. Tesco would continue to expand quickly here, with a variety of stores from Express to Extra.

Another player over the last few decades was Superquinn, founded by former senator Feargal Quinn in 1960. In 2011 Superquinn was acquired by the Musgrave Group.

German discounters arrive

In 1979, Marks and Spencer entered the Irish market but the really big change came with the arrival of German brands Aldi and Lidl.

In 1999, Aldi entered with stores at the Westside Retail Park in Ballincollig, Cork, and Parnell St, Dublin. 

A year later, Lidl arrived. They expanded quickly and now have more than 300 stores between them, employing thousands of people.

People were unsure at first of what to make of these German discount stores but when the recession came, they experienced a boom and shoppers flocked to their stores. It was like a badge of honour to say you got your caviar from Aldi or your garden furniture from Lidl.

Groceries Order

A big moment for the grocery sector came in 2005 when Micheál Martin, the then enterprise, trade, and employment minister,  announced the end of the Groceries Order. “Very simply, the Groceries Order has acted against the interests of consumers for the past 18 years and it is now time for consumer interests to prevail.” 

The Groceries order was introduced in 1987 and banned the selling of goods at below their invoice price. It was established to prevent smaller stores being driven out of business by large supermarkets.

With this abolished, it meant that supermarkets could sell items at a lower cost and bring on a price war, resulting in lower prices for the consumer.

Today SuperValu, Dunnes Stores, and Tesco continued to compete strongly for the number one spot in grocery market share. Hot on their heels are Aldi and Lidl who perform strongly and are gaining a legion of fans.

Over the last year, Kantar said that SuperValu has benefited from its extensive community-focused store network and online capability while Dunnes has been delivering a strong performance in the Dublin region. It said Aldi and Lidl continue to maintain a strong foothold in the Irish market.

Owen Clifford, head of retail sector at Bank of Ireland, said grocery retailers are continuing to deliver a strong trading performance with annual sales increases of over 20% being reported nationwide.

What's in our basket?

According to Tesco, when it comes to what's in our baskets these days, the trends are similar to the early days of lockdown, with demand for grocery scratch-cooking products up 30% and home-baking products up by a third in the last year.

In February 2021 the volume of retail sales increased in 10 business groups
In February 2021 the volume of retail sales increased in 10 business groups

Cleaning products are also up, as are coffee pods. Once the schools reopened, unsurprisingly there was an increase in traditional lunchbox items such as sandwich ingredients.

The health and beauty sector has gone from the fastest growing in 2019 to the slowest during the pandemic. However, Kantar said that beauty is more reliant on how others see us, so expect a strong recovery when we can go out again.

Figures from Kantar also show that three global manufacturers saw an increase in growth by 10% or more since the pandemic: Reckitt Benckiser (RB), Kellogg’s, and Kraft Heinz. The stats show breakfast cereals have been slowly losing out to alternatives in recent times but it didn’t stop Kellogg’s from winning big during the pandemic.

Of course, huge winners have been cleaning products — two brands that have shown massive growth, even pre-pandemic, are Dettol and Harpic, both manufactured by RB. After Covid, we can expect growth here to continue as people will be more aware of hygiene.

In the future, Kantar predicts that with more people working from home, there will be growth in easy-prep food items and healthy snacks. There will also be a move towards more local produce and shoppers wanting to buy less plastic.

Winning new shoppers

Supermarkets are doing well but they still want to win shoppers. What is interesting is that it’s not a ‘one shoe fits all’ type model when it comes to the supermarkets. 

For example, Dunnes Stores has been offering a voucher initiative for the last few years whereby shoppers get €10 off when they spend €50. This is a clever initiative as it really encourages shoppers back into the store.

SuperValu has put a lot of work into developing its loyalty card system, with an updated app that allows vouchers to be downloaded on shoppers' phones.

Dunnes is also developing outlets with more independent retailers in store, such as cheese and meat.

Tesco has introduced scan-as-you-shop technology in 76 stores and has expanded its click-and-collect offering by adding 11 new locations. In the last year, it has introduced queue management technology at all its 151 stores here, installed 391 individual hand-sanitiser units with over 130,000 litres of the stuff used to date, which is enough to fill 817 bathtubs. Over 22,000 sq m of plexiglass screens were installed, enough to cover the Aviva Stadium pitch three times over, while over 750,000 face coverings have been provided to staff.

Tesco Ireland chief executive Kari Daniels said the past year has necessitated significant change both in how customers shop and how they are served. “We prioritised safety of our stores above all, protected availability to ensure customers could get what they needed, and supported those who couldn’t come to store with home deliveries, as well as helping those most in need in our communities.” 

A huge market

The grocery sector is a huge market. Recent figures from Kantar show take-home grocery sales grew by 16% in the 12 weeks to the end of February. Growth was even stronger during the past month at 17% as shoppers spent an additional €151m.

Emer Healy, retail analyst at Kantar, said: “We can see how the months of restaurant and bar closures, working from home, and homeschooling have added up. All those extra meals and snacks at home have led to an extra €2bn spent on take-home groceries, including Irish shoppers splashing out €7.6m on tea and €19.5m on instant coffee to get their fix at home. Totting it all up, the average household grocery bill has increased by €1,000 this year.

“We are saving some pennies on our grooming routines and healthcare, though. With social distancing and limits on gatherings continuing, sales of shampoo were down 0.8% and conditioner 2.7% in the past 12 weeks and deodorant down 5.4%.

“Staying at home more and an emphasis on handwashing has also meant a steep decline in sales of cold and flu remedies — with cold treatments dropping 55%, cough liquids 60%, and lozenges 42%. Of course, liquid soap continues to be an exception in these aisles, and sales were up 99.5% in the most recent 12 weeks.” 

The battle for top spot will continue as society reopens and even though the return of the hospitality sector and the chance to eat out will hit food sales, the competition will be fierce.

At the moment, SuperValu sits at the top of the table as it grew sales by 21% to hold a 22.3% share of the market. It was the only retailer to attract new shoppers into its stores and its customers traded up when they were there — spending €70m more on branded goods than this time last year.

In the same period, Dunnes increased its sales by over 9% as customers picked up extra items in store and continued to spend more per buyer than at any other retailer, at €618.60.

In the past year, Lidl was once again the fastest-growing retailer at 21.8%, with basket sizes increasing by almost 15% year on year. Aldi customers spent an additional €57.1m this period, driving 13.4% growth.

Tesco shoppers added an additional 3.6 items to their baskets this period, more than customers at any other retailer, and helped the grocer’s overall sales to rise by 18%.

Shopping for fish for Good Friday at Quinnsworth, Paul St, Cork. Quinnsworth was founded by Pat Quinn in 1966. He later sold it to Power Supermarkets but it continued to trade as Quinnsworth. It was bought by UK giant Tesco in 1997. Picture: Mark Kelleher
Shopping for fish for Good Friday at Quinnsworth, Paul St, Cork. Quinnsworth was founded by Pat Quinn in 1966. He later sold it to Power Supermarkets but it continued to trade as Quinnsworth. It was bought by UK giant Tesco in 1997. Picture: Mark Kelleher

Winners in lockdown

All the supermarkets have undoubtedly been winners over the last year as opening hours haven’t been affected by lockdown restrictions at all. This has, however, led to frustration within the retail sector.

Darragh Cassidy of consumer website Bonkers.ie said: “While hardware stores, clothing stores, coffee shops, card stores, and florists have all had to close at some stage over the past year, the supermarkets have been allowed stay open and, in many stores, actually continue to sell all these types of goods, which, depending on your perspective, may not be ‘essential’.” 

There is a trend of people popping into larger outlets for a basket of items whereas before they would have shopped locally. It’s unclear yet what kind of trends will emerge in this area post-pandemic.

Bank of Ireland's Owen Clifford said as a result of the pandemic, customers are visiting stores less often but spending more when there. “This type of shopping behaviour favours the larger grocery operators. 

An interesting dynamic has emerged in recent months with the larger operators seeking to retain market share and the convenience operators seeking to win it back.

“Convenience operators have pivoted back towards grocery from being purely food-to-go/coffee-to-go focused and are now presenting themselves as a more accessible, top-up option. They have focused particularly on the large proportion of consumers now working regularly from home,” he said.

Mr Clifford said margin preservation and cost management will be key elements for independent grocery retailers in a post-Covid world. “A price-led proposition, as opposed to a ‘value’ proposition, is unsustainable in the long run for these operators. They need to play to their strengths; excellent customer service, accessibility, quality-led offering in-store and proactive community engagement. They also need to ensure that the health and safety of staff and customers remains paramount in their agenda in the coming months.

“The continuous development and training of personnel is also key to ensure that excellent standards are maintained in-store. Finally, to maintain customer engagement, investment in the store will need to be considered — as Henry Ford once said, ‘If you continue to do what you always did, you will continue to get what you always got’.” 

Smaller retailers will need to "think different" in respect of store revamps, investment in technology, and their staff skill-set to sustain business into the future, said Mr Clifford.

Years ago, people did a ‘big shop’ once a week; over the last year, there has been a trend of people returning to this pattern. People are nervous and want to spend less time in stores.

Kantar figures show people are now shopping less and buying more per trip. Our general shopping plans are more flexible and less planned because they can be. We are, however, living in extraordinary times right now so it’s hard to be fully sure if this trend will stay.

Darragh Cassidy of Bonkers.ie believes post-pandemic, we’ll see more smaller supermarkets. “Smaller family sizes, increased urban living, changing food habits, and increased levels of cycling mean many people prefer to do several smaller shops a week instead. This trend has been evident in the UK in particular where Tesco in recent years has rowed back on plans to open many of its supersize Tesco Extra stores in favour of smaller outlets,” he said.

Evolving technology

As the world evolves, so too does technology. Like many other businesses, supermarkets will be immersing more technology into how they operate. Many of what we will see happen is what we don’t see.

Data analytics and future data gathering will continue to play a huge role in the supermarket sector. When you get sent a voucher for 50c off carrots, it is because the store knows you buy carrots. They have analysed the data and they want you back in their store. They won’t send you a voucher for turnips if you haven’t been buying them.

Superquinn was the first store to introduce the supermarket loyalty card in 1993. It was later, of course, adopted by most of the supermarkets and has become a staple of grocery shopping in Ireland.

These cards can be beneficial for the shopper by offering points and money-offer vouchers but they are just as valuable for the supermarkets. Take Tesco, which has been using loyalty cards since the 1990s. The cards help it collect data on shoppers; worldwide it has more than 16m shoppers signed up for the ‘Clubcard’. That’s valuable data on millions of shoppers that Tesco can use to get them back in their stores each week.

The data that is collected on these cards knows more about our shopping habits than we do ourselves.

Recently Lidl introduced its app to the Irish marketplace. Each week it offers shoppers money off certain items and even free products. Amazon has long been using this technique on its website. Once you buy something you may see the pop-up message, “you might also be interested in this”.

Amazon transition

Speaking of Amazon, they have now too made the transition into the grocery market.

In March, online giant opened a grocery store with the ‘just walk out’ format in London. These stores are well known in the US and Amazon has plans to open more in London.

The stores stock food items like milk and bread as well as Amazon technology products. On entering, shoppers scan a QR code on a smartphone app. When they pick an item and put it in their bag, they are automatically billed and a receipt is emailed to them.

The shop has hundreds of cameras and sensors that detect what the shopper has chosen. When asked if they have plans for similar stores in Ireland, Amazon wouldn’t give anything away and said that for now, it is focused on London.

Amazon also has an offer for supermarkets that is known as a Dash Cart. The customer fills the trolley and sensors detect what is put in and calculates the cost. No need to go to scan everything at the check-out.

Supermarkets have very advanced technology at their disposal which helps them understand their customers and adapt accordingly. They can even go as far as following customers around while they shop.

LiDAR sensors are used by many to track a shopper around the aisles — see what path they take, where they stop, where they don’t, what products did they touch and then decide not to buy. This technology is installed on ceilings and uses laser sensors to feed this information back to store operators.

The supermarkets can then take action depending on the results. They can place products near each other that people are buying together. There’s stories of supermarkets putting nappies and wine close to each other as they are products bought together. This technology is not invasive as it provides real-time insights without collecting personal information.

Mr Clifford said grocery retailers have proactively utilised AI and data analytics to streamline and improve their supply-chain efficiency in recent years. “They are now transitioning this technology to understand more in respect of the customer journey in-store and individual customer buying patterns. As grocery retailers seek to differentiate themselves from their competitors, the use of refined data will become important to support more personalised loyalty schemes and experiences for their customers.”

Technology will continue to play a big role in how we shop in the future. For supermarkets, it is a huge benefit to each week have so much interaction with your customers.

How people shop is a fascinating concept and what supermarkets are doing more than ever is learning from that so they can improve their offerings. As technology advances, we will see it used more and more in stores.

There’s even technology that uses laser sensors to detect if a shelf is out of stock and immediately notifies staff. The worker can then quickly restock the missing items.

LiDAR technology will be known as the technology being looked at for self-driving cars but it was really developed in the retail trade in Japan and used as a way for stores to understand what shoppers do when they enter their stores.

A survey in the UK found that almost nine in 10 people said they would be happy to be monitored by innovative in-store technology if it means an improved experience.

More to come

There’s so much more to come in the supermarket world. Expect to see a lot of unique developments. There’s talk of technology that will alert you if you forgot something based on your regular shopping habits.

In California, there’s talk of a grocery store on wheels that can drive itself to its customers. Using an app on their smartphone, consumers can simply order and the van arrives to their door, letting them pick out fresh fruit and veg.

In China, ‘husband nurseries’ — complete with TVs, magazines, and massage chairs — are proving popular.

Regardless of the scale of change, one thing remains the same: Customers will always look for value.

Mr Clifford said that value will be key for all grocery and convenience retailers. “It will be interesting to see if they focus on a purely price-led model. I believe that a more rounded approach is now required. Covid-19 has reminded us all of the importance of health, wellness, and community. Irish shoppers will certainly be more mindful of their sense of value to the community and the planet in their purchase decisions in the future.

“All of the major operators in Ireland have committed to reducing their carbon footprint via reduction in single-use plastic, food waste, and inefficient energy usage. Competitive pricing will be important but the consumer will also expect more from their retailers."

With regards to what we are buying, consumers continue to have a key focus on food provenance and healthy options. We will see stores develop and offer more, with partnerships key.

The Dunnes Stores in Bishopstown, Cork, has shown how this can be very successful. It has multiple retailers in-store such as K O’Connells Fishmongers from the English Market and James Whelan Butchers.

Musgrave has signed an exclusivity agreement with The Happy Pear for the island of Ireland. We will see more of this type of idea of more under one roof.

SuperValu, Lidl, Aldi, and Dunnes have all outlined plans for new store openings in 2021 across all regions, with a noteworthy focus on satellite towns of Dublin, Cork, and Galway. We can look forward to more initiatives as they compete to keep shoppers and attract new ones.

'The trip to the supermarket is like a social outlet for people now'

Ger Lynch: 'We were at the forefront of everything that had changed.' 
Ger Lynch: 'We were at the forefront of everything that had changed.' 

Ger Lynch, store manager, Tesco in Edenderry, Co Offaly

It’s hard to believe it has been 12 months since the pandemic hit. There have been such large changes to how we work as store managers and it has been a huge learning curve for us. 

It has been a challenging year but I’m incredibly proud of my colleagues and I feel very safe in work.

We’ve gotten used to everything now and we are used to the ‘new normal’ now.

In the very beginning, it was a challenge and we were facing into a lot of uncertainty and it was understandable that people were concerned in the beginning, especially when it came to panic buying. 

We were at the forefront of everything that had changed and every safety measure that came into place. A lot of colleagues were concerned but were so well informed and we put the safety measures in place very quickly for our staff and customers.

There has been a huge demand for online shopping and we continue to prioritise the most vulnerable. We’re continuing to invest in this area. 

Shopping in-store has changed a lot but what we are focused on is making sure the store is safe for people and also helping them out where we can.

The trip to the supermarket is like a social outlet for people now but we just have to make sure that people are safe. We haven’t had many issues with people not wearing masks but overall people are so grateful for the work we are doing. 

There has absolutely been more appreciation for shop workers over the last year.

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