With 10-plus strong brands touting for business on a 5,500 sq mile patch, Northern Ireland’s 1.7 million residents are spoilt for choice when it comes to groceries. If Tesco, Sainsbury, Safeway and Iceland’s stores don’t appeal, there is any number of Spar, Mace, Dunnes, Costcutter, Co-op or Centra outlets to visit.
The impending Safeway sale promises to intensify the turf war. A new EDLP arrival like Morrisons or Asda taking over its 12 Northern Irish stores would put pressure on prices. A Sainsbury or Tesco acquisition could also have a dramatic impact, creating major overlaps in a saturated market.
So does the independent sector now need to consolidate in order to survive?
That issue was brought into relief this week after John Henderson Holdings, which operates Spar in Northern Ireland, and BWG suddenly ended talks on a sale of the latter’s J&J Haslett business, which runs Mace in the province. The deal would have left Henderson’s supplying 600 stores, two-thirds of the Northern Irish convenience market.
“It would have been dominant, but at the same time that would have made it more resilient against the onslaught of the multiples,” says one leading industry figure.
Both parties report they could not agree terms after a four-month due diligence process. “Price was the main stumbling block,” admits a spokesman for BWG.
Another source at BWG said that despite the talks, Haslett did not have a permanent ‘for sale’ sign up. “It is profitable, and it is business as usual.”
For its part, Henderson, which last year had a turnover of £256m, hinted in a statement it would look at other opportunities to grow its market share. “As the Henderson Group is a forward-looking company, its focus remains on organic growth, continued investment and, if the opportunity arises, strategic acquisition.” Its ambitions have been seen in its purchase of 12 Shell service stations by its Andrew Millar company stores division, announced this month (The Grocer, August 9, p10).
Northern Ireland Independent Retail Trade Association chief executive Bryan Gray says Henderson’s purchase of these
sites and its attempt to buy Haslett was likely to be fuelled by an “element of concern” about the multiples’ increasing grip on the Northern Irish market.
But Northern Ireland’s independent retailers are still better placed than their counterparts on the mainline, despite the overcrowded market, he argues. “The independent market in Northern Ireland is possibly stronger than in the rest of the UK, it is less fragmented and there has been a lot of reinvestment in shops by sole traders.”
And independents have the luxury of observing what the multiples test out on the mainland before they get the heat turned up on them in the province, he adds.
Mace retailers share his bullish attitude to the future despite the recent uncertainty over Haslett. The owner of a Mace store in Antrim says: “Trade is great. The multiples are sticking to town centres, and we have our own loyal customers in the estates.”
Dermot McCorriston, who operates a Mace store in Spencer Road, Londonderry remarks: “The multiples don’t affect our trade, there will always be a need for a c-store. Shopping habits are different.
“Independent retailers may find things more difficult as the multiples get bigger. However, with the backing of Haslett we will be OK. The sale has fallen through, so we will revert to the way things were before.”
Gray sums up: “The independents are stronger here than in the rest of Britain. They have a different customer base, and I do not think the multiples are as much as a threat.”