British visitors to Ireland are often amused by Irish road signs like Don’t Pass (as opposed to no overtaking) and Yield Right of Way. These signs indicate that while the Irish and British speak the same language, there are significant differences. Several UK organisations which have ploughed into the Irish market, treating it as just another region, may have been well advised to pause, even yield.
The economic boom in Ireland is unparalleled in Western Europe. UK brand owners, especially retailers, have moved quickly to capitalise on the opportunities this has presented. With British retailing – particularly in the grocery sector – reaching saturation point, Ireland has emerged as a promised land. Shopping malls in Dublin, which is home to a third of the country’s population, have begun to mirror those in the UK, with brands such as Marks & Spencer, Debenhams, River Island, Dorothy Perkins, Boots and Next.
Most of these brands have sneaked in almost unobserved, but some have had a rough ride. Since Tesco’s purchase in 1997 of the Quinnsworth/Crazy Prices chain in the Republic and Stewarts in Northern Ireland, it has received enormous flack from the Irish media. It seems that they can do nothing right. Procurers of Irish-grown and manufactured goods immediately went on the offensive, fearful that the increase in Tesco own-label goods would lead directly to a decrease in locally sourced goods. Tesco has been at pains to correct that perception.
Earlier this month, Tesco Ireland managing director Maurice Pratt announced that “from a zero base two years ago, Tesco now carries 240 Irish-sourced own-label brands – a figure expected to grow to 300 by the end of this year”. In fact, unlike the UK where penetration of own-label goods is as high as 40 per cent, in Ireland it stands at between ten and 15 per cent. But Irish producers are making sure they benefit from Tesco’s plans to increase own-label penetration in Ireland to 25 per cent.
Apart from Tesco, Boots has been the only other UK retailer to come under scrutiny. Perhaps it is no coincidence that both entered the Irish market through acquisition. Instead of establishing the Boots brand from scratch in Ireland, it took over a small, but highly regarded, chain of pharmacies called Hayes Cunningham. Boots was perceived as a company which changes the existing and comfortable.
Andrew Bradley partner at Bradley McGurk Design Management, the consultant for Tesco’s rival Superquinn, says: “The Boots and Tesco experiences reveal some of the fundamental cultural differences which exist between the UK and Ireland. Irish consumers enjoy engaging with retailers, they are genuinely more curious and will ask questions, even about brands. It is not good enough to put up a sign saying “fresh food”. They’ll want to know how fresh and where it comes from.”
UK retail invasion
Bradley believes that Boots suffered because “it seems too remote to Irish consumers, who are willing to suffer a little scruffiness if the offer is genuine. Irish consumers like to deal with people and expect their pharmacist to be an accessible expert.”
He also says that “Tesco didn’t manage its approach to Ireland well, and to a degree Marks & Spencer could do more. A few token Celtic swirls and Irish words simply are not enough.”
Aidan Duffy, director of ad agency DDFHB, part of the JWT network, believes that “on evidence, 90 per cent of the existing UK package is put into Irish stores, but certain compromises have been made”.
He cites the M&S example, when some time ago it decided to accept credit cards. Because there is not the same acceptance of store cards in Ireland compared with the UK, M&S changed its policy on credit cards for the sake of profitability. The move, however, led to confusion in stores based around the border areas, where credit cards, as a rule, are not accepted in stores.
Duffy subscribes to the notion that there has been an “invasion” by UK retailers. This is evident by the occupancy of recently established shopping centres, such as the Jervis Street Centre in the heart of Dublin, where 90 per cent of outlets are British owned. “The penetration of UK retailers is quite extraordinary in the fashion sector, although less strong on the grocery front,” he says.
He adds: “Tesco has not improved its share two years down the line,” while certain indigenous retailers seem to have profited. He denies that since Tesco’s arrival, Dunnes Stores (one of his key accounts) has traded more heavily on its Irishness as a competitive advantage.
“The up-turn in Dunnes Stores over the past two years is to do with its resolution of ongoing industrial disputes,” he says.
Duffy also points out that the indigenous retailers have improved what they offer and are particularly strong in providing good value. “Our interpretation of value has changed. It used to mean cheap. Now it’s as much about quality of service, convenience and range, as it is about low prices. The rise of the Celtic Tiger means most of the population has more disposable income. The Irish consumer and expectations have changed dramatically in recent years. Anyone entering the Irish market must be aware of this.”
Travel has also become UK dominated, where the four key players control 80 per cent of the market. The leader, Budget, is owned by Thomson, Falcon/JWT is owned by First Choice, Panorama by Airtours, and Sunworld by Thomas Cook.
It’s a buoyant market, with 462,000 passengers taking charter flights out of Dublin alone last summer. This figure is predicted to rise to 500,000 this year. More than ten per cent of Irish people now take more than one package holiday a year.
The media sector has witnessed enormous growth in UK brands. The Sunday Times in particular has experienced a staggering growth in circulation, up 187 per cent between 1991 and 1999. It also enjoys a very high profile.
News International Ireland circulation manager Syd Devine, credits the newspaper’s success on a few factors, not least increased Irish editorial content, Irish offices, dedicated Irish staff and an Irish editor.
“Ireland’s economic strength was one of the reasons for the growth in circulation, but not the deciding reason to invest editorially in Ireland. Globally, newspaper circulation was falling at three per cent a year – Ireland was identified as a way of off-setting the decline in the UK generally,” says Devine.
The first real attempt to tailor The Sunday Times to Ireland started in 1991 with the appointment of the first editor – Alan Ruddock, now editor of The Scotsman. But Ruddock was still based in London.
The Irish-dedicated pages increased steadily and the first Irish office was opened in Dublin in 1992, with additional contract staff recruited. Sales continued to grow and the amount of Irish editorial increased. Dubliner Rory Godson replaced Ruddock, and the Sunday Times relaunched its Irish edition in July 1996. The current full-blown Irish edition was launched in September 1998.
As a UK brand which seems to have got it right, Devine’s advice to UK brands waiting in the wings is: “It is vital for the Irish to see that UK companies are bringing jobs to Ireland; that the products are sourced locally and that the managers appointed are, themselves, from ‘auld sod’. You need to have a dedicated Irish team, preferably recognised names, but definitely locally based. The UK company has to make a contribution to the country – after that, we’ll take anybody’s wages.”