DUNNES STORES is gearing up for a major assault on the Irish grocery market following its head hunting of the managing director of its biggest competitor, Quinnsworth/Crazy Prices.
Quinnsworth's managing director, Mr Dick Reeves, has given up his position with the British owned supermarket chain to become director of food with Dunnes. In effect, he is taking over the position held by the former Dunnes chairman, Mr Ben Dunne, before Mr Dunne's abrupt departure from the family owned firm three years ago.
In a major management reshuffle, Power Supermarkets the holding company for Quinnsworth and Crazy Prices has promoted its marketing director, Mr Maurice Pratt, to take over as managing director. Mr Pratt is one of the highest profile retailing executives in the country through his regular appearances in Quinnsworth's advertisements.
The two appointments will mean that Mr Reeves will be going head to head with his former marketing director for the dominant position in the £4 billion Irish grocery market.
There were divided views in the retail trade yesterday on whether Mr peeves will try and unseat Quinnsworth/Crazy Prices from the No 1 position in the Irish market through a renewed price war or through taking Dunnes more up market.
"It'll probably be a bit of both. Dick Reeves obviously knows Quinnsworth inside out and he was largely responsible for the launch of Quinnsworth's `premium' branded range," said one industry source. "One thing is certain, the consumer should benefit," he added.
Mr Reeves's departure from Quinnsworth and his appointment to a senior board position with Dunnes was a major surprise to the retail trade, and is seen as a significant coup for Dunnes. Mr Reeves spent 14 years as a food buyer with Dunnes before leaving to join Quinnsworth in 1983.
His return as director of food has been warmly welcomed within Dunnes, which is seen to have suffered in the marketplace since Mr Ben Dunne's departure. "Since Ben and a lot of his close allies went, there has been something of a vacuum on the grocery side, Dick Reeves's appointment will fill that vacuum and more," said the source.
For Quinnsworth, the departure of a managing director who has been the driving force behind the chain's sales and profits growth in Ireland is a blow. Industry sources have indicated that Mr Reeves may not be the only Quinnsworth executive to move over to Dunnes, and it is understood that Mr Reeves is assembling a team with which he aims to increase Dunnes' estimated 19 per cent of the £4 billion plus Irish grocery market.
Quinnsworth and Crazy Prices have a combined 25 per cent of the Irish market. It is expected that Mr Reeves's main aim will be to enhance Dunnes' 19 per cent market share at the expense both of its arch rival and also the Musgraves' Supervalu chain with a 15 per cent shares of the market, and Superquinn, holding 7 per cent. The rest of the grocery market is divided between "symbol groups" such as Spar, Centra, Mace and Londis and small local grocery shops.
Operating margins in the Irish grocery trade are low varying between 3.5 per cent 5.5 per cent but both Dunnes' and Quinnsworth's purchasing power has meant that both groups have been able to generate substantial profits from their Irish operations.
Quinnsworth owned by Associated British Foods does not report separate accounts for its retailing operations in the Republic. But close analysis of the accounts indicate that the Power Supermarkets holding company which takes in Quinnsworth, Crazy Prices and the small Lifestyle sports operation had profits of £42 million last year followed by profits of £29 million in the first half of the current financial year.
There has been periodic speculation that ABF might sell the Irish operations, either to a management buyout group or to a trade buyer such as Sainsburys, but so far that has remained only speculation. A sale of the Irish operations would probably involve a price of between £350 million and £400 million.
Putting a figure on Dunnes' grocery profits is more difficult, as not only does the company report separate accounts for its grocery and drapery divisions but it does not disclose any profit and loss figures. Dunnes converted to an unlimited company to keep its accounts private.
A Goodbody analyst, Mr Liam Igoe, has estimated Dunnes' operating profits last year at £45 million, but there is no breakdown as between the grocery and drapery divisions.
