THE appointment of Mr Dick Reeves to the board of Dunnes Stores signals the start of a new round of grocery price wars between the major players in the £4 billion market.
Mr Reeves comes to Dunnes from Power Supermarkets where he was managing director running Quinnsworth, Crazy Prices and Lifestyle Sports.
His appointment is seen as an attempt by the family owned group to bring a focus and synergy into its food operation and to develop a cohesive plan to increase market share.
He is expected to quickly build a sharply focused team to strengthen Dunnes' position in the grocery market.
In addition to fighting existing players for a larger share of the grocery market, Mr Reeves's appointment is seen as a preemptive strike to position the company for the expected arrival of British grocery multiples.
Among the existing players, the traditional market share of the multiples is under threat from the "symbol" players such as Supervalu, Mace and Spar, particularly in the lucrative Dublin market.
Five years ago the multiples had 60 per cent of the grocery market, but this has fallen to just over 50 per cent, while the "symbols" share has increased from 20 per cent to 24 per cent, according to Grocer Magazine.
Mr Reeves's move to Dunnes will worry the manufacturers who supply both multiples. One commented yesterday. "He will be able to sit at a table, look us in these and say I want the deal they are getting Dunnes' share of the grocery market fell from 21 per cent at the beginning of 1995 to 19 per cent at the beginning of this year, according to figures published by the, retail trade magazine, Checkout.
The Dunnes share since fell to around 17 to 18 per cent because of the industrial dispute, but has been recovering.
The market share of Quinnsworth and Crazy Prices increased from 24 per cent to just over 25 per cent in the same period, according to the Checkout figures.
Other large operators include Supervalu/ L&N which has about 15 per cent of the market, Superquinn with 7 per cent, Spar and Centra with almost 4 per cent each, Roches Stores with about 3 per cent and Mace with about 2 per cent. Marks and Spencer has just under 5 per cent of the food and drinks market, according to Grocer Magazine.
Mr Reeves comes to Dunnes as the in store battle between private labels and branded goods takes off. Market sources say the multiples are anxious to develop high quality private or own label products for two main reasons.
They want to increase their profit margins and develop customer loyalty in advance of the arrival of British multiples which have strong sales of high quality own label products.
One industry source said. "The Irish multiples are afraid that Irish consumers would flock to the British multiples because of their reputation for high quality own label products".
Within Quinnsworth Mr Reeves has been developing this end of the business in recent months. The traditional own label yellow pack and KVI (keen value item) products have been disappearing from the shelves.
Instead, Quinnsworth has moved its own label products up market, introducing its "premium choice" products with high quality labelling and packaging. Quinnsworth plans to have 200 premium choice products on its shelves by the end of the year.
Food prices are higher in Ireland than in Britain, but profit margins in the Irish food retailing industry are lower than in Britain.
This is partly because of the very low level of own brand market penetration here and higher distribution costs. Irish margins are estimated to range from 3.5 to 5.5 per cent compared with 6 to 7 per cent in Britain, according to a Goodbody analyst, Mr Liam Igoe.
With competition between the two main multiples expected to intensify, the Irish consumer should be the main beneficiary. But suppliers are likely to see their profit margins squeezed.
