Superquinn sells out to combat Tesco growth

The Quinn family will retain a say in the management of the company through its investment in Select, giving it between 5 and 20 per cent of the company, while Feargal Quinn will be president of the business. Simon Burke, the Irish businessman who was head of the Hamley's toy store group in the UK until 2003, will become executive chairman of Superquinn.

For the consumer, there is likely to be little in the way of visible change, with the company continuing to trade as Superquinn and Superquinn Select, its recently launched convenience store banner. The existing shop and support management team - including other members of the Quinn family - will also stay with the company.

For the Dublin-based retailer, expanding to the rest of the Irish market has become an increasing priority in recent years as it seeks to combat the growing nationwide presence of British rival Tesco, which entered the market in 1997 through the acquisition of Quinnsworth.

The British giant has been chief among a number of suitors for Superquinn in recent years, but its approaches, like those of other potential bidders, have always been rebutted by the staunchly independent group, which sees its own expansion as one key means of fighting off future bids.

Now present in Kilkenny, Carlow, Clonmel, Dundalk, Waterford and Limerick as well as the capital, the 20-store group is continuing to look for new sites for development, and its new investors are expected to play a key role in this particular area. Tesco has been snapping up prime retail locations from under Superquinn's nose, often offering three times as much as its smaller rival to secure the deal, and the additional cash boost provided by Select will give Superquinn significantly more muscle when it comes to negotiations.

But it will not be expansion for expansion's sake. The new management team is also expected to take the chain more upmarket, modelling itself on Waitrose and M&S (in terms of quality, not performance) rather than following the cut-price route of Tesco, and its choice of store locations will reflect this new strategy.

Indigenous retailers such as Superquinn remain very important in the Irish market, with Tesco the only foreign group in the top five (Musgrave, Tesco, Stonehouse, Dunnes and BWG) with a 19 per cent market share.

Yet the British number one is perhaps not the biggest threat to local players. Analysts at M+M Planet Retail​ suggest that it is the German discounters Aldi and Lidl who are the most likely to lead the development of the market, with a clear impact on prices.

Last year Aldi announced plans for 80 new Irish stores over the coming years, although it currently operates just 10, while Lidl plans nationwide coverage in the medium term, building on its 40 existing outlets. The analysts predict that the two discounters will have up to 15 per cent of the Irish market by 2009.

Irish grocery retail sales reached around €8.6 billion in 2004, some 15 per cent ahead of the previous year, according to M+M Planet Retail.