Caulfield McCarthy

Source: Exec Digital UK

Date :7/26/2007 10:31:20 AM

Emphasising service & choice to compete with the discount retailers

Caulfield McCarthy Group is one of the largest independent supermarket groups in Ireland, with an annual turnover in the region of €130 million. Operating eight SuperValu stores in the East, South East and South, from Malahide in County Dublin to Bandon in West Cork, the group employs over 1,000 staff, operates three shopping centres and has now diversified its business model by moving into property development

Written by Donna Harle & Produced by Ben Weaver

The group was originally founded by brothers Colm, Paddy, John and Tom Caulfield in the 1970s, with the four brothers and brother-in-law Martin Sinnott as shareholders of the group. Caulfield McCarthy Group Ltd was then formed in May 2004 as a result of a management buy out which saw three members of its management team, Ann Marie Caulfield, Thomas Caulfield, and John McCarthy, acquire the entire business from family shareholders, each obtaining equal stakes in the company. Intriguingly, the deal was a hybrid of a corporate buyout and a traditional family handover, and was viewed as a transfer of the business to the next generation rather than an overhaul.

SuperValu franchise

John McCarthy, the group’s managing director and one of the key figures behind the buyout, had joined the company from Musgraves in 2000. Ann Marie Caulfield, a qualified solicitor and the company’s human resources director, takes care of the firm’s legal issues with Thomas Caulfield as operations director.

Caulfield McCarthy runs the highest-selling group of SuperValu supermarkets in the franchise chain owned by Cork retail giant Musgraves. The association with Musgraves gives Caulfield a number of advantages, including the power of their supply chain, efficiency, competitive pricing, in-store offers and coordinated marketing campaigns. Yet in the context of the power of the large chains, it remains very much a small company relishing the challenge of competing with the big boys; Caulfield competes against the discounters such as German firms Aldi and Lidl by offering greater levels of service and choice.

The strategy has seen the company win many industry awards over the years, including independent retailer of the year, SuperValu store of the year, store manager of the year, food safety awards, off-licence of the year and environmental awards.

In addition, the group holds the Excellence Through People quality mark, which recognises the attainment of best practice in the management and development of people.

In the year ending 2005, turnover for the group fell by almost €20 million from €101 million to €82 million, with profits also down. However, Caulfield McCarthy managing director John McCarthy said that this was due to the inclusion of just ten months of trading in 2004/2005 accounts, and that the group was in fact on track to post record turnover levels. The company has embarked on a major expansion plan, including taking over the lease for SuperValu Merchants Quay in Cork, which McCarthy has described as ‘very successful’.

In the year ending 2006, turnover at Caulfield McCarthy group had soared to over €130 million, as it continued its rapid expansion plan. This was despite the challenges that the repeal of the Groceries Order at the end of 2005 brought. The Groceries Order was introduced in 1987 to facilitate real competition in the grocery retail sector. The then Minister for Enterprise Micheal Martin said that the Order kept the prices of the vast majority of grocery products in Ireland at an artificially high level by allowing suppliers to specify minimum prices below which products cannot not be sold. However, the repeal was a challenge for Caulfield as it allowed an atmosphere of more predatory pricing to prevail, and generated a retail environment akin to that in the UK, where the largest chains are all powerful. That Caulfield has managed to retain a strategy of community retailing in this atmosphere is testament to the company’s commitment to bringing shops to people, rather than people to shops.

Community work

The company’s primary responsibility is to its investors and to deliver continuous profit growth on their behalf whilst simultaneously ensuring Caulfield’s future success, yet the company is also committed to developing a valued and positive place in the communities it serves. While the supermarket sector in Ireland is fiercely competitive, the group operates a different business model to that of the big discounters, and attempts to integrate itself in the fibre of the community.

In 2006, Caulfield McCarthy announced its on going support of Children’s Charity Barretstown. The support of Barretstown, which was established by actor Paul Newman 13 years ago to help children deal with the emotional trauma of serious illness, began with the delivery of much-needed equipment. The charity has since been announced as one of the chosen beneficiaries of the Caulfield McCarthy Group’s regular charity drives, with a number of fund raising initiatives.

The group has been associated with a number of local charities over the years, and plans to continue to support and invest over €200,000 annually to a number of charities local to its stores and centres.

Property Development

In 2006 Caulfield McCarthy agreed a €100 million deal with property developer Howard Eurocape to acquire and redevelop 265,000 square feet of retail sites. The joint venture deal was for the redevelopment of the then seven Caulfield McCarthy retail sites and to further develop more sites. Caulfield has begun to move away from focusing purely on supermarkets. The company now has a long-term strategy of developing more shopping centres and continuing to acquire freehold premises, and it has developed a competency for developing retail space and shopping centres

The company has sites located in Bandon, Kilkenny, Malahide, Waterford, New Ross, Enniscorthy and Tipperary. The three largest sites - the Riverview Shopping Centre in Bandon, the Loughboy Centre in Kilkenny and the Hypercentre in Waterford - have SuperValu anchors with approximately 51 shops.

Successful expansion would be impossible without Caulfield’s excellent customer service in its retail spaces. These service levels have been inspired by a franchise wide policy. SuperValu’s success depends on the company’s ability to trust its employees, respect their individual contributions and make a commitment to their continued development. Taking this approach to heart, Caulfield looks to develop an environment that allows it to attract the best people and provide opportunities through which its employees can achieve personal and professional satisfaction, helping the company strive to develop the best workplace in the industry.