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Thursday, December 4, 2008

Dunnes Stores Better Value beaten, selling out early 2009

Dunnes Stores have been part of the Irish retail business for over 60 years now. Rumour that ASDA the British giant was to take over Dunnes first surfaced in October. Much was made about a meeting and then nothing. I understand however that in January there may well be an announcement that the Dunne family are to sell their shareholding to ASDA. The Dunne family shareholding was split on the inheritance of the firm, by the children of Ben Dunne Senior. As they all now age and face the prospect of their smaller shareholding being diluted further by the next generation, I believe that the main players are now on the verge of selling out in the January Sale. I understand that suspicions of this impending move have been aroused by the decision of Dunnes to cancel purchasing in January. This will mean that orders at suppliers linked to the company will not be renewed. This will mean for Irish manufacturers that after Christmas order books will dry up. The Dunnes family had established a number of companies that would solely provide services to their shops. I believe these jobs will be on the line. Jobs in transport and fruit and vegetable handing will likewise be in doubt. ASDA’s efficiency is that through economies of scale they can buy in bulk and uy cheaper because they do volume. Whether they would be interested in dealing with Dunnes suppliers is another matter. However more worrying for employment may be ASDA’s view that already Dunnes have too many outlets in Ireland and that the outlets may be of the wrong size. Smaller outlets will close as ASDA concetrate on low prices and low number of outlets. Dunnes have over 100 outlets on the island, that number is set to drop, already the outlet on Main St Wexford has closed.
ASDA is, of course owned by US giant Wal-Mart. Wal-Mart are strongly anti-union and while the Dunne family had a difficult relationship with their unions Wal-Mart will make Margaret Heffernan look like Mother Theresa. Dunnes at least accepted their existence and settled down to co-exist. It cannot go without mention that they withstood a strike of 3 years as they were determined to stock South African oranges during the apartheid regime. I take the view of Ben junior that the company had diversified but had not remained competitive in clothing or grocery. Having said that I still shopped there but I noticed that the days of all tills being open were long gone.

I wonder will the Dunnes name survive or will it go the same way as Quinnsworth, L&N, Five Star, Crazy Prices or H Williams? All giants in their day but, eventually big fish in a small pond. Well the sharks are in here now, speculators lining up to take on banks, Wal-Mart who has no interest in our economy other than the profit they can suck out taking over in Dunnes. I expect the St Bernard brand will disappear.
The old days of Ben Dunne Senior will doubtless be regarded as the halcyon days but I wonder will ASDA or Wal-Mart understand the Irish consumer as well as the Dunne family did?

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