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THE REINVENTION
OF DUNNES STORES
The notoriously
secretive
retail
giant
keeping
quiet
about
the very
obvious
upmarket
changes
at its flagship
store in Dublin.’s
St Stephen’s
Green
Shopping
Centre.
Roisin
Burke
and
Colette
Sexton
report
is
Dunnes is being reinvented.
charcoal
and white decor, gleaming
white futuristic checkout
areas and discreet, stylish
MargaretHeffeman, the teak tough matriarch
lights. It may sound like the
of the Dunnes Stores retail empire, has
interior of a rather posh
long harboured ambitious to bring the chain
high street boutique. But
ho, this is the new incarnation upmarket Once, before her brother Ben was
ousted from the business, heflew to Singapore
of a retailer long associated with
and purchased £20 million worth of cheap
laminate wood flooring, glaring lighting
nylon shorts without informing her. Heffeman
and booming voices reciting special offers
sent him straight back to cancel the order.
and deep discounts. Ireland’s biggest indigenous
Scandinavian
retailer has gotten a makeover.
***
This is Dunnes Stores 2.0.
Instead of the St Bernard brand, customers
former very senior Dunnes
now get Paul Costelloe, Carolyn
Stores executive said that a
Donnelly, Lennon Courtney and Paul
major operational rethink has
Galvin. Slowly, surely, Dunnes is moving
actually been in the works for
away from the “stack em high, sell
it cheap” mantra installed by the group’s
a long time. “When Margaret Heffernan
founder Ben Dunne senior, and reinforced
took over and after they ousted Ben
by his son Ben junior. Now, Dunnes
Dunne, she took the business upmarket
is actively buying up coffee chains (Cafe
at that point,” the source said.
Sol) and artisan butchers (it snapped up
Indeed as early as just over a decade
businesses associated with the high end
ago, Heffeman ordered a more upmarket
butcher Pat Whelan just last week) to add
refit of many stores, introduced the contemporary
to its instore experience.
Spanish fashion label Savida
There is even industry chatter that the
and commissioned
slick photoshoots
retailer might launch a sub-brand and rebrand
featuring models who had worked the
a number of its more stylish stores
catwalks in Paris and Milan. “So I see
under a new name.
this as a continuation of that drive, ” the
But what has driven the sudden change
same source said.
of strategy by one of Ireland’s most successful,
But that drive has begun to rapidly accelerate
and secretive, businesses? Some
now, due to the impact of attacks
believe chief executive Margaret Heffernan
on both flanks of Dunnes Stores’ business.
is cannily repositioning Dunnes up
On the grocery side, German supermarket
market to avoid being outmuscled
by
brands Lidl and Aldihave increasingly
the German discounters on grocery and
evolved from being bare bones deep
Primark on textiles. Others question if
discounters to invaders of the territory of
the company is being smartened up for
Dunnes, Tesco and Supervalu. They’re
a potential sale. Notoriously secretive,
offering premium ranges, organic foods,
Dunnes Stores, a €3.5 billion giant with
Irish local artisan produce, handmade
115 stores across Ireland andBritain, is not
chocolates, quality wines and so on, all
saying anything. But, without queshon,
while continuing to undercut everyone
One
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else on price.
Then on the clothing side, Penneys/
Primark has risen to rule the cheap but
trendy clothes market on a massive global
scale.
Dunnes Stores owners know it needs
to critically step up its bid to distinguish
itself and its proposition if it’s going to
continue to survive and thrive.
a regular basis. It sends a confusing
message to shoppers,
as Dunnes is not low-cost,
but it is also not considered
upmarket.”
Thisis reminiscent of a similar
reinvention Superquinn
went through in the 1970s,
according to Feargal Quinn,
founder of the supermarket
chain that was sold to Musgraves
in 2011.
Thispushto reinvent itself includes shifting
“When we launched in
its operation to a department store
1960, we started off with
model across many of its locations, according
price, price, price,” he said.
to Euromonitor, a London-based
“And then we discovered
market intelligence firm.
that to have the long-term
Euromonitor saidits high-end fashion
approach, you have to differentiate.
collaborations with the likes of Lennon
Dunnes seems to be
Courtney and Galvin “all seek to redefine
doing very well in that. They
the retailer’s apparel offering, aiming it
are clearly adding value and
towards the more discerning customer
quality.”
and moving away from its historic credentials
On the grocery side he
as ayalue retailer”.
notes that Dunnes Stores has
It’s not a strategy without risks. Lecturer
changed its tagline from ‘Simply
in retail management at Dublin
Better Value’ to ‘Simply
Institute of Technology Damian O’Reilly
Better’ and this new change
compares Dunnes’ more upmarket
is reflected in the sale of
clothing move to Marks and Spencer’s,
high quality meat, fish and
pointing out that the British retailer has
cheese alongside competitively
not done well in fashion sales over the
priced ambient goods.
past ten years.
“Dunnes Stores appears
“The mixture of Irish designers in the
to be targeting more affluent
Dunnes clothing range is not quite right, ”
shoppers who want choice
he said.
and good quality, similar to
“The various designers attract different
Superquinn’s market in its
audiences and none of them have a big
heyday,” Quinn said.
enough range to attract consumers in on
Taking risks
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Top; Dunnes Stores' upmarket new flagship store in Dublin's St Stephen's
Green Shopping Centre; above, Cafe Sol; and right, a Paul Costelloe outfit
Creative
collaborations
,iPaul Costelloe are the first thing that
greet youTpromolecf with gorgeous
high fashion photography.
There’s even a hipster-look chair
Other changes and expansion plans are
also afoot. Reports last year suggested
one comer.
Downstairs, the grocery section has
Dunnes was poised to open 40 new stores
been paved with tasteful slate tile and
in Britain, potentially acquiring a string
has a branch of Sheridan’s cheesemongers,
offormer M&S stores. In the end, nothing
a well-stocked delicatessen and
came of it. But there is a feeling that the
chain will continue to explore opportunities a wholefoods area worthy of a South
County Dublin farmers' market, and
in the North and in England.
tasteful Helen James crockery on
In the shorterterm, Dunnes is targeting
online shoppers. Euromonitor said online
display.
retail is an area Dunnes is set to develop
James formerly worked in New'
York with Donna Karan and has produced
this year, bringingits entire product range
a range for Dunnes’ increasing
online, especially in the grocery division.
This wouldbe quite a departure. A latecomerly stylish and premium homewares
to the digital retail party after years
section where Donnelly and Costelloe
of false starts and under-investment,
It also have lines.
Will craft butcher Pat Whelan, whose
launched its online selling service for
business. as first reported by this newspa
fashion and homewares only in 2013, and
a ‘click and collect’ grocery Service for per, is being acquired by Dunnes Stores,
its flagship Comeiscourt store in Dublin
provide the artisan meat counter element
to this type of new format?
in 2015.
And what about Cafd Sol, the cof
But if Euromonitor is correct, citing
up by Dunnes
sales generated by internet retail at fee chain snapped
pre-Christmas?
Its founders helped
Dunnes as having risen from €3 million
Dunnes to launch Its trendy Considered
in 2013 to €20 million in 2015, it needs
Cafe, a whole new out-ofstoieconcept,
to do more.
with more to come.
“Its online grocery shopping service
is expected to be rolled out nationwide
in the near future,” Euromonitor said.
However, one Dunnes insider, speaking
ehindthe scenes, change and
on the basis of anonymity, said fears
reinvention are being plotted. A
of cannibalising stores’ sales could yet
hiring drive brought a big injection
halt this.
“There is a Dunnes Stores within ten
of new blood at the start of
minutes of 95 per cent of households
last year and Dunnes, which tends to
in Ireland. They don’t want to diminish
almost always do things with its own
in-house expertise rather than outside
those store sales,” they said.
consultants, recruited a string of project
Certainly, the investment in instore
design is significant. Take the case of its managers skilled in areas such as store
and concept redesign and online retail.
outlet in St Stephen’s Green Shopping
Centre, located metres from Grafton
This young cadre seems to be helping
inform a seismic shift upmarket.
Street.
GAA star and fashion blogger Paul Galvin’s Also notable were the early signs of
signature collection of military style
a change in temperature
from nuclear
bomber jackets and carbonised cotton
winter towards spring thaw regarding
T-shirts Is in pride of place in menswear,
media engagement when Dunnes held
and golf sensation Rory McDroy’ s collection an actual press event last year, inviting a
chosen few journalists to check out the
is nearby
latest in its Simply Better range, where
In womenswear,
Dunnes’ exclusive
‘creative collaborations’ with the likes of a Dunnes executive chatted openly and
effusively to press over a fancy lunch.
Lennon Courtney, Carolyn Donnelly, and
ry
D
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a fishmonger on the right. Morrisons A
Thisis something normal for most retail
has that in Britain and it has struggled.” m
outfits, but a never-never for Dunnes
Just over a year ago, Dunnes opened H
Stores. Until now A summer barbecue
its first ever entirely separate non Eg
press event is being planned.
Dunnes Stores-branded business.
Not since Ryanair decided to get all
The Considered Cafb is on Drury Vj
warm and cuddly with customers has
Street in Dublin, with cool fittings there been such a sea change to an Irish
cutlery in old Bordeaux wine cases, *
consumer business’s approach to publicity
exposed brickwork and pots of preserves
and not a Dunnes logo in sight.
It was Cafe Sol’s people that Dunnes
approached to advise on the Considered
Cafe. Now, with Cafe Sol and its forrader
Last week, Dunnes continued its acquisitions
Emmet Daly subsumed into Dunnes as
streak with a proposed deal to buy
hospitality director, it looks like there
two meat wholesaling businesses controlledcould be more along similar lines to
by the family business of prominent come in Dublin first and then around
Tipperary butcher Pat Whelan.
Dunnes, as first reported by Businesspost.ie,the country.
notified competition officials of its
As it is, Dunnes is possibly the biggest
intention to acquire Whelan Food &Meat
cafe owner in the country. Of its 75 stores,
Processors and Tipperary Sustainable
i around 60 have cafes and restaurants and
Food Company Whelan also operates a 1 now it has added ten Cafe Sol premises.
chain of high-end butchers’ shops, including “On its own it’s a substantial busi”1
outlets at several Avoca stores, m ness, but it’s not their core activity,”
but these will reportedly not be part of
the Dunnes insider said. “I would say
the deal with Dunnes.
2 an opportunity presented itself to buy
As regards its new craft butcher acquisition, Cafe Sol, and that way create a brand
a former Dunnes senior figure said m
f with something readily recognisable
this wasn’t an entirely new departure.
and appealing.
Dunnes acquired a Cork craft baker five
“That’s precisely what they needed.
years ago.
When I was there we were always looking
“It first took a small space inside
to see who we could get to run the cafes,
Dunnes stores and paid for a craft baker
while the senior high-profile jobs were
to be there selling as shoppers went by
on retail.
It was quite successful in the five shops
“Being put into the cafes was seen as a
in which it was trialled. So they were
sideways career move, even though it’s
told let’s upscale to 40 shops, but they
a huge business.”
had no money to upscale to that size, so
The purchase of a coffee chain is understandable,
Dunnes bought them.
Damian O’Reilly said, given
“Butthey were cannibalising their own
Lewis and Penney’s partnerships
business,” the source said.
with Caffe Nero and Insomnia respectively.
“Asfor specialist butcher counters, they
have been a problem for retailers all over
“They are looking for the integration
the world.
of a high street brand into the store.
“With most products you buy Kellogg’s
I’m not sure that will work, ” he said.
cornflakes for X and sell for Y,but meat
“Tesco attempted something similar
is not like that.
with artisan coffee chain Hoole and
“It’squite specialised to work out what
Harris and Giraffe restaurants in Britain
is the right price and very difficult to
and it was not successful.”
keep on top of profits made. That’s why
While tapping these interesting new
big supermarkets tend to prefer selling
high-end directions, Dunnes has not
prepacked meat, or to have people who
entirely lost sight of the price battle that
look like butchers, but are cutting pre
all supermarket retailers monitor constantly.
prepared joints.”
But it will seek to compete with
O’Reilly of DIT said: “I don’t see
guile rather than an all-out unwinnable
into a food department price war.
w Dunnesstoremoving
with a baker on the left and
“While Dunnes will not engage in an
New instore?
(John
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really feel like it’s worth paying more
for,” she said.
“The company now needs to focus on
discounts to existing shoppers through
transforming its brand, because at the
vouchers
and
its
loyalty
card,
and
hold
m
S onto customers, especially family shop111 moment, people still associate it with
value, as opposed to premium and quality
pers and larger shoppers,” the former
goods. It is easy to change the inside of
top executive there said. Its discotmt
the store, but it is very difficult to change
voucher
scheme
has
been
critical
to
its
¥
the inside of a culture, and Dunnes Stores
’ growth.
needs to embrace that change in order to
“A move towards
couponing
and
really reinvent itself.
money back offers has helped the retailer “Dunnes needs to give people a reason
maintain its market share, ” agreed
to like the brand and to give them a reason
O’Reilly.
to go to them, trade up and pay more,”
“However, this is not a sustainable
she said. “They need to warm the brand
strategy in the long term, because customers
up. People are starting to like Lidl and
Aldi, and not just because of great value,
who already shop in Dunnes
Stores are buying more, but it is not attracting but because they have strong brand
communications. ”
new customers to come in.”
What would Ben Dunne snr think of
the break away from its core price -sensitive
customer base to the more discerning
While stores, product layout and offers
shopper?
have been improved to coincide with the
Well he too was an innovator in his day
reinvention of Dunnes Stores, its success
and a pioneering adopter of the brand
hangs on whether it nails that mix of pre
new superstore format where customers
mium and value brands right, according
could browse at will that revolutionised
to Kay McCarthy, managing director of
Irish retail.
strategic planning agency, MCCR Premium
He would probably adhere to the ‘innovate
can’t work without value too.
or die’ business adage.
“Consumers want to treat themselves,
And will the family be the ones to innovate
but they are also looking for value, and
into a new generation?
In time-honoured fashion, no one from
as a result Dunnes Stores cannot afford
Dunnes Stores will comment on any of
to be niche, ” she said. “It needs to appeal
this, but a line on its website sets out
to both spectrums.
something of its mission: “We continue
“fhere are more people back in the
to be run by Ben Dunne’s family. Dunnes
workforce, so there is a consumer out
there with more money, but that consumer Stores is not merely a name above the
door, it is his legacy.”
isn’t going to spend unless they
all-out price war with the discount opk
erators, they will continue to give strong
The product mix
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Who is driving change at Dunnes Stores?
The ownership of Dunnes
is complex, controlled
through three classes of
ordinary shares.
One third is owned by
Heffeman and her family,
and one third by her
brother Frank Dunne and
his family.
The ultimate ownership
of the final third is unclear,
but other family members
are getting increasingly
involved.
“I never worked in a
business where the inter¬
company directorships,
sources said.
Frank Dunne, who
had been content to raise
“It’s constantly: ‘how
can we do this better?’
horses and farm his Meath
with Margaret in particular
lands, has been much
and Frank [Dunne, Heffernan’smore involved in recent
brother and fellow
years especially on the
director] to a lesser extent.
grocery side.
Heffeman’s closer affinity
“They’ll say, ‘they have
is for fashion and
this type of technology in
Japan’or This going on in
homewares.
It is said that Margaret’s
America’.”
daughter Anne Heffeman,
Heffeman remains the
a doctor by training but a
undisputed boss despite
director of the businesses,
stepping back from some
nal drive to improve was
so strong,” said one insider.
is involved to a greater degree
than before.
Sharon McMahon, a
daughter of Margaret’s sister
the late Elizabeth McMahon,
has been closely
involved for years.
Favoured outsiders close
to the top at Dunnes Stores
include fames Wilson, the
former Superquinn and
Asda director who is in
charge of the food side, and
long-time Dunnes stalwart
John McNiffe, who runs
store operations.
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From top, Lennon & Courtney, Padraig
Harrington and Paul Calvin all have
fashion ranges in Dunnes
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