Introduction
Dunnes is a retail store that was established in Ireland in 1944, and with stores in several other locations like the United Kingdom and Spain. During the early years of establishment, the store was identified as the leading retailer matching quality and costs. However, the entry of Aldi and Tesco meant competition for the available market share. Thus, the company has since lost its position to Tesco and continually scrambles for market share. The report presents a snapshot analysis of the issues and successes of Dunnes, as well as possible solutions to its problems.
Business Overview
Dunnes is Ireland’s first brand associated with the provision of food, fashion, and homewares, all in one store. The brand was established about 70 years ago through the visionary lens of a man with the need to provide Better Value to the society (Dunnes Store’s par. 1). Presently, the business operates an approximate 152 stores that are located not only in Ireland but also in Spain and the United Kingdom.
In Ireland, the company owns 90 stores, considered some of the largest in the country with each store exceeding 100,000 square feet (Brooks par. 9). These stores deal with a combination of products ranging from clothes, food, and homeware. Besides operating the combination stores, it has also specialized in cloth retailing, opening 15 such stores in Ireland. To ensure differentiation and brand uniqueness, the retailer has its clothing label operating under the name St. Michael brand, under which it also operates other sub-brands. It also correctly operates five food stores in Spain (Brooks par. 11)
Dunnes is a private business that is run and managed by family and guided by the principle of providing quality products at an affordable price, all summed up by the Better Value philosophy. Since its establishment in 1944, the brand has evolved into multichannel international retailers dealing with home wares, fashion, and food (Dunnes Stores par. 4). Nonetheless, the business has continually overseen the expansion and development of in-house labels like Centered, Gallery, and Savida. Food wise, the company business is keen on supporting Irish suppliers for their food halls, relying on them to supply a variety of fresh products. The business has hired about 150,000 employees owing to its expansive operations.
The performance of Dunnes has recently been dwindling due to competition from other similar retailers like Tesco, Aldi and Supervalu (Brooks par. 3). These rivals have eaten into the company’s market share, leading to minimal sales following their competitive prices and hard discounts. One report by Brooks (par. 5) explains that the business’ market share decreased from 23.7% in June 2011 to 21.6% in August of the following year (“The Dunnes Stores Strike” par. 5).
The market performance further declined to 21% in September of the same year. Competition has been extremely tight with Tesco holding the first spot in the retail market share. For instance, while Dunnes managed a market share of between 23.9 to 24.3% in 2013 during the festive period of December, Tesco managed a market share of 27.8% and SuperValu coming in third at 19.5% (Brooks par. 1-4). With a steady fall in its market share, the company stands a danger of losing its second place to SuperValue.
Yearly analysis of the store’s market shares further reveals that the store is facing a dip in its market share ratio. The store’s market share was 23.8% as at February 2015 though it later reduced 22% (Brooks par. 4). In February the previous year, the store’s market share declined from 23.6% to 21.5%. Nonetheless, the company has still been able to maintain a strong market position in Dublin which has led to high sales as most of the populations’ spending is done at Dunnes Stores.
Comparison of Business vs. Industry and the Society Dunnes Operates In
Many businesses have had to come up with survival tactics in the wake of the recent economic recession. One such business is the Dunnes Stores. The hard hitting effects of the economic depression in 2007/08 have forced the firm to reinvest in opening new stores, among which are the shops on Patrick’s Street in Cork and the store on Grafton Street in Dublin. Industry wise, actors in the retail business have had to contend with price wars to remain competitive. In a bid to take advantage of the competitive rivalry, Dunnes engaged in a price cutting spree of up to 20%. It also embraced product differentiation by using cloth labels and brands like Miss Real and Savida.
Even though Dunnes operates an online store, the company has experienced a technology lag as it did not have any online presence up until 2013 (Mulligan par. 1). The business has to play catch up with its competitive rivals like Tesco, Superquinn, and SuperValu, which have since thrived on a significant online presence.
A Comparative Analysis of Tesco and Dunnes
An analysis of Dunnes and Tesco reveals that Tesco is the retail store leader of the two. First Tesco has the highest market share rating at 26.5pc share, while that of Dunnes stands at 23pc share (Mulligan par. 5-6). This is to show that most people prefer to shop at Tesco as compared to Dunness. Thus, even though Dunnes has a better cost image and a better store layout compared to other retailers alike, customers prefer shopping at Tesco owing to an extensive product range.
Secondly, Tesco operates a better online presence as compared to Dunnes Stores, which have contributed to higher market sales, as most customers now shop online (Tesco Plc par. 1). On the other hand, Dunnes just recently created their online platform (Mulligan par. 1). As a result, they have lost numerous potential market sales from potential buyers.
Recommendations
It is imperative that Dunnes makes an effort to regain consumer confidence and protect its sales. One such way would be through selling products that are age-sensitive. One such way would be to avoid scandals like designing bras and similar bottoms for young children aged three years as was previously done.
It is also necessary that Dunnes aligns its brand image through proper remuneration of staff and avoiding union scandals. Even though the recent industrial action has not affected the company’s sales, it is prudent that the Dunnes management solves any internal problem with its staff to avoid union drama (Wall par. 6). Such scandals only affect the image of the company as well as possible future investment.
Finally, the world has become a global village. People have abandoned the traditional store shopping behaviors and are now online shoppers. Most people are looking for convenient ways of shopping at the comfort of their homes. Following this realization, it is prudent that Dunnes invests the same amount of effort as evident in their physical stores, into their online platforms.
Conclusion
Dunnes position in the retail business is at stake. The report shows that unless the firm can restructure the main areas like their online presence and better brand image as a means to appeal to their customers, they are likely to succumb to competition. It is also very necessary that the company settles internal issues with its staff to ensure a positive working environment, which is likely to transcend to better customer service.
Works Cited
Brooks, David. “Company Profile: Dunnes Stores.” Retail Week. 2013. Web.
Dunnes Stores. Dunnes Stores. Web.
Mulligan, John. “Dunnes Plays Catch-Up with Self-Scan Tills.” Irish Independent. 2013.
Tesco Plc. Tesco.
The Dunnes Stores Strike Hasn’t Stopped People Shopping There. 2015.
Wall, Martin. “Staff at Dunnes Stores Vote for Industrial Action.” The Irish Times. 2015.