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Superquinn, the legendary Irish food retailer that since 1960 has defined the notion of exemplary customer service and in-store innovation, is being sold by the Quinn family to an Irish investment group.

Select Retail Holdings, a new company backed by a group of private Irish investors, is to acquire the entire company, pending approval within three or four months by the country’s Competition Authority. The Quinn family will be a minority investor in Select Retail Holdings, and the current chairman and managing director, Feargal Quinn, will maintain an advisory role in the business and the title of president. Other members of the Quinn family who work in the business – such as Eamonn Quinn, who is deputy chairman and director of marketing – plan to stay in their roles under the new ownership.

Reports put the Quinn family’s remaining stake in the company at about 20 percent, and the sale price of the company in the neighborhood of $500 million (US).

Simon Burke, a partner in the new company, will become Executive Chairman of Superquinn. Burke, one of the best-known Irish businessmen in the UK, was the chairman of Hamleys from 1999 to 2003 and is credited with the turnaround of the UK toy retailer through customer-centric initiatives that re-energized the company’s stores. Prior to that, he spent 12 years as CEO of Virgin’s retail and entertainment businesses. Burke plans to move back to Ireland and work full-time for Superquinn.

In an exclusive interview this weekend with MNB, Senator Feargal Quinn, who founded the company and infused it with his own personal sensibilities and taste, said that the decision to sell the company was made because he “realized that it is not easy for a company our size to survive and…thrive.” While some independent retailers can make it because they are essentially niche players with no major market share aspirations, Superquinn has a 20 percent market share in Dublin and is looking for an even greater share as it expands – but those goals and needs made it difficult in the current environment.

Quinn said there have been instances where the company has bid on potential store sites, only to be outbid by Tesco, which would offer three times as much for the location. “We couldn’t have succeeded doing that,” he said, noting that “we were looking for a solution to that problem. Once we get the site, we know we can succeed.”

Essentially, he said, the investment company is made up of real estate and property development people who own locations that will be reserved for Superquinn; the company won’t have to go up against Tesco or other competition to bid on these locations. “They are real estate people with sites available already, and even more sites in the future. We will get the sites we require.” In addition, he said, the investment group will provide Superquinn with greater financial resources that it can use in store development.

This is not the first time that Superquinn has looked for outside solutions to its competitive challenges. Over the past few years, it has developed several wholesaler and retailer alliances that have given it greater purchasing power in the marketplace. “Those opportunities,” Quinn said, “now could be expanded in the future.”

While the Quinn family no longer will own a majority of the company, he said, it was key in coming to this decision that Superquinn continue to be an independent Irish company. “Those two words are very important to us,” he said, noting that the company always has had suitors and had to deal with rumors that it was being sold to multinational retailers. “Most retailers our size have ended up as part of much larger retailers,” he said. “We are finding a solution that is much better than that.”

Quinn said that he is confident that Burke, the new chairman of the company, will bring the right kind of attitude and excitement to the business. Hamleys, he said, “is a joy of a store to go into,” and if Burke “can bring that level of excitement to Superquinn,” everything will be just fine. While Burke does not have experience in the food business, Quinn said, “he is using all the right words, and he’s very big into brands and customer service.” He said he also is impressed that Burke is “not an in-and-outer,” but is making a long-term commitment both to Superquinn and Ireland.

As for his plans, Quinn said that he was going to retire from an active role in the business this year anyway, so from that perspective, the shift in ownership is perfectly timed. He said that he expected there to be a certain shock among the troops; after all, some of his staff have been working for the company for 44 years and any change can be disquieting. But he said he expects to be very much a presence in the stores, “a holder and reminder of our ethos of customer service.”

In a subsequent conversation later in the weekend, Quinn said that he had been gratified by the positive response from company employees once they had been informed of the change. The sense seemed to be that employees understood that long-term viability required some sort of change, and appreciated the priorities established by Quinn.

The company currently operates 20 stores and has some four thousand employees. Most of the units are in and around Dublin, but the company is in the middle of a national expansion to cities such as Kilkenny, Carlow, Clonmel, Dundalk, Waterford, and most recently, Limerick. In addition, Superquinn has announced plans for a rapid expansion into the c-store business with a format it has dubbed “Superquinn Select.”

In addition, Superquinn has achieved an international reputation for innovation in a number of areas – its highly successful frequent shopper program, environmental initiatives, fresh food offerings, online shopping, empowerment of store staff and, most especially, customer service.

However, despite its Irish roots and considerable charms, Superquinn has been dealing with a rapidly expanding Tesco, the growing presence of both Aldi and Lidl stores, the announced intention of Costco to open warehouse clubs there, and the probability that at some point, Wal-Mart’s Asda Group would decide to enter the Irish market. There have been laws in Ireland that have prohibited big box stores of a certain size from being built there, but the government has recently eliminated that cap on store size, making an influx of giant competitors all the more likely.
KC's View:
Listening to Feargal Quinn, we flashed back to that scene in Jaws when Roy Scheider, actually seeing the shark for the first time, looks at Richard Dreyfuss and Robert Shaw and says: “I think we’re going to need a bigger boat.”

Surveying the competitive situation in Ireland, Quinn realized that he needed a bigger boat.

Now, we have to admit to somewhat shaky objectivity on this story. We have known Feargal Quinn for close to 20 years, have done numerous print and video stories about his company and management style, and have on numerous occasions been the recipient of his personal and professional kindnesses. So we know the company well, and must confess to a certain sadness at having to write this story.

In 2005, it simply may not be possible for many independent retailers to survive in an environment ruled by behemoths and conglomerates. In order to remain viable, one simply may have to find partners, investors or alliances.

That’s too bad. Unfortunately, when investment-minded companies take over smaller entities, their eyes are on the balance sheets and not on the tangible and intangible differential advantages that such stores often bring to the marketplace. By coming up with this unique solution, and by maintaining Superquinn’s Irish ownership and independent nature, it would appear that the company has a good shot at avoiding these pitfalls.

Let us offer some examples…

Superquinn’s main office is christened the “support office,” because of Feargal Quinn’s firm belief that its only purpose was to support the stores, not create and dictate policy. That same belief can be seen in the regular, mandated visits that top executives make to all the company’s stores. After all, you can’t learn much about customers back in the office…

Years ago, Superquinn decided to create a food safety program around the DNA cataloguing of every piece of meat that was sold by the store. The company always had an exceptional reputation for both food safety and meat quality, so much so that when there was a mad cow scare, Superquinn’s meat sales actually increased. People trusted Superquinn. But that wasn’t enough, and so the company instituted the DNA traceability plan. It wasn’t cheap, and an accounting-driven company probably would have vetoed the idea as too much. The notion of “too much” customer service simply doesn’t fly at Superquinn.

Big companies often don’t understand these core values. Headquarters are there to dictate policy, not listen to shoppers and associates. And return-on-investment and short-term profits are the prime incentives never to be violated, not even for the greater and long-term good. But keeping these values intact will be key to Superquinn’s continued success.

Another Superquinn tradition that we’ve always admired is when senior executives go into the stores on a regular basis and essentially open the books to all employees - explaining how their stores and departments are doing, and how they compare to other stores and departments in the company. We wondered if the new investors would want this tradition to continue, and Quinn told us that he “would be very surprised if it is not actually enhanced.” In other words, he believes he is putting the company in not just good hands, but the right hands.

We hope, for the sake of both Feargal Quinn’s legacy and the overall health of the food business, that Superquinn remains a paradigm of retailing excellence and innovation. It would seem that Quinn has done his best to assure this – keeping control of the company in Ireland, and making sure that the purchasing company was an investment group as opposed to some retailing colossus that would swallow up both its real estate and its culture; such companies say they seek synergies and efficiencies, but seem to only find diminishing sales and vanishing customers.

We wish both Feargal Quinn and Superquinn the best. They deserve it.

But we are saddened, and retailing shines a little less brightly today than it did yesterday, if only because Feargal Quinn’s sunny personality won’t be quite as evident on a day-to-day basis.

What worries us in the broader sense is that as this consolidation trend persists, the loss of small independent companies will continue the gradual creative dimming of an industry that depends on entrepreneurial minds and spirits for real innovation, and cannot afford to lose them.