Musgrave chief executive Noel Keeley wanders through the group’s revamped SuperValu outlet in the well-heeled south Dublin suburb of Knocklyon. Ostensibly, he is meant to be leading a showaround of the chain’s prototype new format shop, with its sustainability theme, wider aisles and new LED lights made from recycled CDs. But he keeps getting sidetracked into performing little shop floor tasks. It’s not at all apparent that he even notices he is doing it.
On multiple occasions, mid-sentence, Keeley begins straightening crooked items on shelves as he goes past. Another time, walking briskly through the fresh produce section, he somehow manages to stoop to the floor to pick up a stray piece of onion peel without even breaking his stride. It is an almost gymnastic feat. A few seconds later the onion peel is gone. But where? Into his pocket? Did he magic it into a bin without anyone noticing? How did he do that?
These are the little things grocery retailers do. They’re fiddlers. They like nothing better than roaming the shop, turning labels to the front and admiring the presentation of their jazz apples.
What is interesting about Keeley’s dose of typical retailer obsession is that he spent most of his career doing other things. He worked in manufacturing, ran a health board for an Inuit community in a remote corner of Canada, he was a human resources director and a consultant.
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Even when he joined the Musgrave group at the height of the Celtic Tiger about 18 years ago, he worked in a headquarters job at first. He has overseen various retail operations through the years, but he also spent a decade in charge of Musgrave’s wholesale business, Musgrave Marketplace.
Keeley’s first job at the age of 13 was in a supermarket in Tullamore, his hometown. It was owned by the company for which his father worked for 44 years
That isn’t quite the same as shop floor retailing. Wholesalers tend not to be offended by the sight of a bit onion peel at their customers’ feet. Keeley’s typical retailer reflexes must have been honed somewhere else.
There is a straightforward explanation as it turns out. Keeley’s first job at the age of 13 was in a supermarket in Tullamore, his hometown. It was owned by the company for which his father worked for 44 years. Retailing can easily get into your DNA like that.
“Working on the provisions counter there is how I learned how to bone a side of bacon. If you put one in front of me now, I could still do it,” says Keeley. “After starting in retail at that age, I never thought I’d be back in it now. But hey, you can never predict these things.”
He now runs perhaps the biggest family-owned company in the State, with sales of €4.5 billion. The Musgrave family of Munster business blue-bloods have owned the Cork-headquartered business for 146 years. It is best known for its cash and carry outlets and also for the supermarket chain, SuperValu. But it also owns Centra, Daybreak and Donnybrook Fair in the Republic, as well as Dialprix in Spain. It owns Mace in Northern Ireland, where SuperValu and Centra also operate.
Notwithstanding its chief executive’s shopkeeper tendencies, Musgrave is, strictly speaking, not really a retailer at all. It is more of a wholesaler. The group operates about 45-50 shops but they represent only a tiny portion of its revenues. A further €450 million or so comes from its food service division, which supplies food and drink to restaurants, hotels and other catering businesses.
The bulk of the company’s revenue comes from selling goods wholesale to the independently owned retailers who hang the names of Musgrave’s various chains over their doors and have contracts to buy much of their stock from it.
The overwhelming majority of its network of 260 or so SuperValus (including 37 in the North), 587 Centras (including 102 in the North), 75 Mace and 273 Daybreaks are independents. It is they who are Musgrave’s customers, rather than the people paying at the tills. This helps to explain why Keeley is careful to shower them with praise at almost every opportunity.
But he is also right to highlight that Ireland is unique in having a chain of independents as one of the biggest operators in the market — SuperValu has 21 per cent of the market, just behind Dunnes Stores on 23 per cent and Tesco with almost 22 per cent. That success is admirable, he says, when you consider its roster of independents compete with several international grocery behemoths.
“We are up against some of the best food and beverage chains in the world, such as Aldi, Lidl and Tesco. And, obviously, Dunnes Stores is no slouch either,” says Keeley, grinning through gritted teeth at his backhanded compliment for SuperValu’s main indigenous rival.
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Its food service business, which is now the biggest in the State, competes with multinational giant Sysco, which entered the Irish market by buying Pallas Foods.
The Musgrave group’s financial results for last year, shared exclusively this week with The Irish Times, show sales rose by about 1 per cent in 2021, while profits rose by €12 million to €92.7 million.
The Musgrave family received a dividend of about €18 million, which seems conservative when you consider the company’s balance sheet is as strong as an ox. It holds accumulated profit reserves of more than €537 million and it almost doubled its cash last year to about €221 million.
The pandemic was good to grocers. Musgrave’s annual sales were only about €3.9 billion before the pandemic, or €600 million lower than they are now. Coronavirus supersized sales in grocery shops as lockdowns kept everyone at home. Keeley took over as chief executive in January 2020, weeks before the pandemic took hold.
“It was a baptism of fire,” he says. It certainly was.
Keeley’s original baptism in the retail industry more than 40 years ago as a schoolboy came in the Five Star supermarket chain owned by the DE Williams wholesaling group. The Williams family were magnates of the midlands, the Musgraves of their region. After leaving school and working in a manufacturing business for a few years, Keeley subsequently got itchy feet and wanted to travel.
“I met this girl. Isn’t there always a story like that?” he muses, grinning. The woman he met later became his wife. She was a nurse in Tullamore and would later train as a midwife. After she returned from a brief stint working in Australia, they both wanted to work abroad together.
“Neither of us fancied the US, she didn’t want to go back to Australia, and we didn’t think England was far enough away. With the language, that left Canada.”
Keeley and his wife ended up in the eastern Arctic in a tiny hamlet called Rankin Inlet, on the west coast of Hudson Bay
They moved to Toronto in 1989 and after a year they almost returned home. “Toronto was an expensive city to live and work in, and we figured we could have as good a life back home. But there was a shortage of midwives at that time in Canada and somebody said to us that we should go up north where life was cheaper.”
Keeley and his wife ended up in the eastern Arctic in a tiny hamlet called Rankin Inlet, on the west coast of Hudson Bay. Its population was about 1,600 and about 85 per cent were of indigenous Inuit ethnicity: “It wasn’t far from the Arctic Circle. You had to fly in and fly out. There were no bars, restaurants or anything like that. Then, in 1997, we moved to Yellowknife, which was basically a metropolis by comparison.”
After a year-and-a-half there, they moved back near Rankin after the local government asked Keeley to run the health board, which was on the point of collapse. He spent four months getting it back on track. “They did offer me that job permanently but my wife also warned me that if I stayed there, I’d be staying on my own.”
They moved back to Ireland in 1999, at the beginning of Ireland’s long economic boom. Keeley went to work at University College Cork as its head of human resources: “What I was to learn was that, in 1999, people in Tullamore thought Cork was further away than Canada.”
A few years later he joined Musgrave as its head of human resources, before working his way to the top job via a variety of senior roles in the Cork group.
Kelley’s tenure as chief executive has meant him shepherding Musgrave through one epoch-defining event, the pandemic, into another, the cost-of-living crisis. Grocery inflation at 13.4 per cent is at its highest in decades, prompting Musgrave to spend €60 million this year funding price cuts and promotions to try to ease the burden on shoppers.
“Consumers aren’t able to take all the price increases and they won’t, because it is such a highly competitive market.”
There has been a huge surge in own-label sales, as customers seek cheaper alternatives to the big brands. According to market research firm Kantar, more than 46 per cent of grocery sales are now accounted for by private label products. Keeley stops to admire many of them as he wanders around the Knocklyon SuperValu, including its Signature Tastes range.
The staggering boom in grocery retail sales that came with the pandemic had already started to subside earlier this year before the cost of living crisis set in. On the flip side, Musgrave’s food service business was hammered during the pandemic, while its retail and wholesale business soared. Those trends have reversed somewhat this year.
Keeley says the food service division, which recently bought Italian speciality goods chain Italicatessen, is up about 50 per cent this year as hospitality recovers. Meanwhile, retail sales are down across the market. Kantar recorded the sector’s sales as falling by 7.3 per cent in the 12 weeks to the middle of March 2022.
Take-home grocery sales were back in positive territory across the sector in recent months — SuperValu’s were up 0.5 per cent in the last Kantar assessment — but this is mainly due to inflation at the tills, rather than higher volumes.
The food service surge, he says, will make up for ‘some’ of the decline on the retail side. But not all of it
Most observers expect the Irish grocery industry to be down this year by low single-digit numbers in percentage terms. Keeley won’t be drawn on how much Musgrave’s sales will be down. He says it all depends on how Christmas goes.
The food service surge, he says, will make up for “some” of the decline on the retail side. But not all of it, clearly. This implies that 2022′s group revenues will be down quite a chunk on 2021. Even a 2 per cent drop would see it lose out on close to €100 million of revenues. With energy costs surging, profits may not come as easy this year, although Musgrave has plenty in reserve to see it through.
“It is very difficult to call 2022 at this stage. Has it been more difficult than 2020 or 2021? Absolutely. Christmas will depend a lot on people’s mood. It is also the first Christmas with minimum unit pricing (MUP) of alcohol. Alcohol was a always key battleground at Christmas, with a lot sold below cost. We welcome MUP — it is probably a good policy anyway. But it will also make an interesting Christmas without alcohol as a battleground.”
He said he expects a “reasonable” 2022 for the group. Management of the group’s finances will not have been helped by the recent decision of its former chief financial officer, Myles O’Grady, to return after a short period to his old employer Bank of Ireland, where he has this week been named chief executive.
In the meantime, Keeley’s Musgrave must also grapple with other challenges and market trends, such as the shift towards a sustainability agenda. The company has set aside a €25 million fund to provide grants to its independent retailers for green projects.
SuperValu has also just signed up for a further five-year stint as the main sponsor of the Tidy Towns competition. Keeley wants to take on a wider sustainability theme.
“We are a purpose-driven business, and our purpose is growing good businesses. I know that sounds a bit generic, a bit jargon. But what we do has to benefit everybody around us, including the community and also our independent retailers. We care as much about how we make money as how much money we make.”
Right on message, as a good retailer should be.
******
Name: Noel Keeley
Job: Group chief executive of Musgrave
Age: 55
Home: Cork
Family: Married with two daughters
Something about him we might expect: He likes visiting supermarkets while abroad.
Something about him that might surprise: He can bone a side of bacon.
