IF anything sums up what went wrong with Ireland, it is the saga of Superquinn. On the positive side, if anything shows how we can get out of this mess, it is also the receivership of one of Ireland’s best-known brands. Before looking at the receivership and the implications for the rest of the country, let’s consider for a moment Superquinn.
In 2001, Feargal Quinn, a man I had never met, asked me to speak at a conference he was hosting. Now it wasn’t any old conference, it was a gathering of Europe’s top retailers who operate under an umbrella group called EuroCommerce. This organisation represents retail brands and over 100 commercial federations in 27 European countries. These were people who knew their businesses and Feargal Quinn was the president of this organisation.
He was courteous to a fault, which you would expect from the man. But more interesting was the fact that he seemed to know everyone in the business and he understood the business backwards. Here was a retailer to his toes.
As is often the case at conferences, if you bother to listen, you will learn more from the participants than they ever learn from you, the speaker.
The people whom Quinn had assembled in the RDS that day in 2001 knew more about European economics, trends and what was actually happening on the ground than any learned economist. They spoke about interest rates, exchange rates, producer prices, trends in global food manufacturing, sourcing products in exotic locations, the prices of freight from and to China, what was selling in Shanghai and why there was going to be a commodity-price boom in the years ahead.
But they didn’t only know the macroeconomic patterns; they also understood what was going on inside the heads of their consumers.
They knew what was happening to family budgets, they knew what was happening to savings and, more significantly, they understood their customers.
And Feargal Quinn was the guy they all looked up to.
That afternoon, one boss of a huge Dutch retailer told me that Quinn was simply the “best in the business”, that he was always ahead of the game, always knew what his customer wanted and where the customer was going next.
In the 1970s, when he was building the business, Quinn visited the US to see how suburban trends in the States were changing the way people were shopping. But it was more than shopping — he was studying the way we were living and the way our suburban lifestyle was changing everything about us.
He saw that this would happen in Ireland and that Irish tastes would change as global tastes did. He saw the emerging patterns in obesity and the way in which health-conscious Americans were adapting their diets accordingly. He understood that as a society gets wealthier, among the most conspicuous changes are in diet and the way people shop. He also learned from the Americans that the customer is king, or in Superquinn’s case, queen.
The Irish housewife was changing in the 1970s and 1980s. She was more educated than her mother and, unlike her mother, she was working. The explosion of the female workforce was going to change profoundly how and what we ate and how we shopped.
Feargal Quinn understood this, arguably before anyone else. He was amongst the first Irish retailer to speak of the “shopping experience”. He understood human psychology and the fact that we identify with brands and we behave like herds. He copped on to the fact that many rational, clever humans end up identifying with a product or brand. And ultimately, rather than saying: “I like that” product, many people say: “I am like that”. I am a “Superquinny” type of person. Like it or not, that is the way many of us behave.
He put it all in his bestselling book ‘Crowning The Consumer’. But before he wrote it down, he had already put it into effect in his shops. This knowledge was then used to change the face of retailing in Ireland.
I have asked lots of working women whether the Super- quinn experience is different and they have all agreed that it is. Yes, it might be pricier than other supermarkets, but overall it is a more pleasant experience.
Now just before you think this is a PR stunt for Feargal Quinn, all I am trying to point out was that here was a man who knew his trade and you can’t ask for more than that.
When he sold up, it was a sign to us all that the boom had gone mad. He could see that the prices people were prepared to pay for his supermarkets were crazy, so he sold everything he had worked to create.
This was the story of boom-time Ireland. And the story of the sort of ‘financial gobshitery’ that replaced basic economics, driven by greed and hubris.
The bankers who hadn’t a clue what they were doing and mistook a large overdraft for an economic miracle were both in control and out of control at the same time. The balance sheets of good companies like Superquinn were loaded up with debt which would ultimately cripple them because no matter how good a company is — or a country for that matter — if you take on too much debt, the entity will default. And this is what sunk Superquinn.
As the Americans say, “Good company, bad balance sheet”. So what do you do? You fix the balance sheet and save the company. You call in the receiver, ensure the future of the company by telling the creditors of the company to line up in an orderly queue and do a deal with the new owners. New capital always takes precedence and you start again.
Thankfully, this is happening in Superquinn and another proper retailer, Musgrave, is taking the opportunity presented. It is not unusual, it is called capitalism. Some creditors win and some lose and away we go.
Now consider what we can learn at a national level from the Superquinn saga.
IRELAND is like Superquinn: a good economy, hijacked by eejits and financed by fools. The worst thing about a fool is that he doesn’t know he is a fool. The way you deal with these types is you apply the rules of capitalism to them. The same banks that lent to the developers that took over Superquinn are the same so-called pillar banks that we are supposed to save.
So save them — but apply the rules of capitalism to the saving. Tell the creditors to line up and accept the terms. If the main creditors are now the ECB as well as the bondholders, you put them into a room and tell them the game is up. Force debt for equity on them and start again.
The state of chassis in the euro at the moment gives us the opportunity to act, take the lead, be decisive and move on.
One thing is clear, the ECB and the European leaders have no idea how to deal with this crisis, so why wait? How much more evidence of European incompetence do we need?
What works for Superquinn will work for Ireland. Let’s do it.
I love the term “financial gobshitery”
Excellent article David, but shouldn’t “The state of chassis in the euro” be “The state of chaos in the euro”? I’ve got caught out by spell-checkers that think they know best.
Of course the reason why Quinn sold in the first place still hold. Take Clonmel, SQ is in the middle of a town. Where Tesco, M&S, Dunnes X 2, Lidl and Aldi all have space to expand. Ample space and will still have lots of carparking.
Oh, and of course, shopping is no fun anymore.
Very informative article. And *financial gobshittery*, great term. Conceptualizes the ponzi economic spam the insiders are spewing out through the media to cover up their gigantic inside derivatives CDO inside bank job.
Meanwhile famine underway in Africa and gluttonous financial headbangers are plundering and pillaging the economic system and getting away with trousering monies in the billions for sitting at a computer screen watching blips light up in a rigged stock market.
Time for an apocalypse. I call upon God to eliminate this human contagion.
Maybe the supermarkets in Ireland will reduce eventually to two main players just like what happened the Irish Whiskey Distillers did here .In Scotland there are thirty two independent owners with lots of various brands between them.
IRELAND is like Superquinn: a good economy, hijacked by eejits and financed by fools.
Correct. And you are correct in saying that the fools do not know they are fools. All they know is how to go to great lengths at maintaining the aura of sophistication, because they have decided that sophistication is the suitable antidote for a head that prefers not to do serious thinking.
We are a country of individual lions led by a bunch of donkeys, to use a quote from one of David’s articles about 18 months.
EU Common Market The purpose of why the various members decided to form an alliance was to enhance the wealth between the member states. Why should the same members form another alliance to share in the burden of the union when that burden is caused by rebels ? There is no common goal between them that will motivate each and every member to aspire to something better and there is no single authority that holds the purse to give confidence from the top down. Tomorrow will be the feast day of St Bi-lateral and his blessings will see the pairings… Read more »
The Battle of Orgreave.
Fergal saw the Tescos, Lidls and Aldis and found his niche game was up. Ireland’s sophisticated taste was going mainstream. Select Retail Holdings came in around 2005, Fergal cashed in and Superquinn was rubbish afterwards. You could see the poor stock cotrol and penny watching from day 1. The place was destroyed by bean counters who thought a business was just a matter of balancing books. I am not too sure what this has to do with Boom & Bust Ireland. Seems like this collapse of SQ would have happened anyway. Face it, incompetence and get rich quick schemes with… Read more »
David, Immagine the day after the whole EU, ECB, US Treasury, SAFE of China have all seen the light and accept a unilateral reduction of say 50% of their Irish bonds on day one of Punt Nua. Who, pray tell, would finance the net public borrowing requirement of circa €15 billion/30 billion punt Nua? In dreams begin responsibilities, the great Yeats once wrote. A lot of people use you as their principal reference in macroeconomic commentary, so be prudent in your analogies. I appreciate your focus on communicating complex situations through parables, but you risk inducing people into false hopes,… Read more »
No bankster left behind. The worrying thing about this former Clinton policy advisor is that he is still influential in the Elders of the US Democratic Party.
Forget Somalia, the rich need another bailout.
St Lorenzo da Brindisi
Tomorrow we celebrate a great saint from the south of Italy who was victorious in battle .
Lets hope his hand will be shown to all of us again as the EU decide their fate.
Watch out for QE to infinity
Good timing from the USA/QE3 to infinity
I feel sorry for the suppliers who will not be paid for the goods that they supplied to Superquinn in good faith, they will be pushed to the back of the queue while the banks who lent stupidly to the owners of Superquinn for the purchase of property, will get paid first. In other words the suppliers are subsidising the banks losses, then the same banks will be on their backs looking for repayment of loans and overdrafts, its NOT FAIR these losses belong to the banks not the suppliers just as private banks losses belong to themselves and not… Read more »
Tomorrow in the corridors of power there will be more Super Values and the President will thus finally say: ‘Let the meek inherit the earth’.
And thus sprang forth stamps to lick , stamps on our money , stamps to win , stamps on food , stamps on imports , stamps on our feet , stamping dance , stamp tax , saving stamps , stamps to leave the country , stamps to enter the country ,travel stamps etc
Only by then tomorrow will be today .
Great article, I was wondering on the astuteness of Fergal Quinn selling out at the time he did to the turkeys who bought it all top of the market in 2006. Expect our peacocks to fan out their tails with tall tales today of a Greek bailout with crumbs for us. The fact is at our levels of debt Ireland is scuppered and our Dail cabal are committed to scuppering it more with more damage in the next budget. As DmcW wrote in earlier article, we are a debt collection agency for the banks in the eu, a vassal state,… Read more »
I bought a Spar in Kilmeaden in Oct of 2004 for €780,000. By the time 2006 was over I was convinced it was a good purchase albeit a bit overpriced. The next 4 interest rate rises, builders getting laid off, etc.took hold less disposable income was spent in Spar. By June of 2008 I had a 25% drop in business! 25%! I was a student of Fergal Quinn by virtue of being from San Francisco and marrying an Irish girl who imigrated in the 80s to S.F. iknew how to retail at a level of excellence no other Spar had,… Read more »
EU Judgement Forum
There is no palatable solution to this crisis today
How about joining a Fudge Cake Party ? We could fill ourselves with calories.Its better than the Cooks we have meeting there.
Read the Banner by Sarko ‘ Lets be Philosophical ; he says ‘ …Pragmatism is too painful says his aid .
I think today is another Victory for The Duke of Wellington a great Irishman and a Great Leader unlike the prancers we have there today.
This is a very basic question. Noonan is talking about ‘getting back to the markets’ so the country can borrow what it needs etc. Wouldn’t it be possible for this country (or any other) to completely forget about borrowing from these loan-sharks and, instead, to work hard to ensure that we produce enough to pay for all our needs, now and into the future. Obviously I’m not taking about some sort of theoretical (and impossible) self-sufficiency which involves shutting ourselves off from the rest of the world a la North Korea (or Ireland of yesteryear). Imports and exports are fine… Read more »
Word is our annual repayments will reduce to €9 bn/annum from € 10/annum approx. We enter negotiations on common CT, backdown there. Of interest to banks in Europe is the pot of gold in CT they want from us. Repayments to extend out from 7 to 15 yrs approx. Details will emerge online in due course. With this level of ongoing debt repayment fed with austerity budgets, we’re scuppered. It will be interesting to hear how Enda the Titanic will grow economy out of this one:) OFF topic, tragic the number of doctors we educate for export and the numbers… Read more »
Speech concerning the eventual path of increasing debt levels, and bailouts, in the US.
The debt increase is needed to sustain the ponzi scheme.
At the end, we see the conclusion. The money that you are putting in via taxes, will be returned to you when you need it, but it will buy less – much less.
Same applies here. There will be no money in the “pension reserve fund” in six months – let alone when most people in mortgage-suburbia are going to retire.
Looking at various websites talking about an interest rate cut from 5.5% to 4%. The real issue here is Ireland’s junk rating. And this is the rationale behind the interest rate cut. The entire EU is a debt ponzi heap. And the junk rating hit a raw nerve in Europe. Basically, the best that could have happened to Ireland in regard to the negotiations over the IMF “Facility” which is actually a bailout, was the awarding of a junk rating. Basically, were are in the Vietnama scenario – the EU and ECB has to win the situation in Greece, and… Read more »
Operation Overlord 11, all taxpayers and their families
assemble immediately in DunLaoghaire, we’re heading for Monaco and other ports to join the 6000+ Dennis O Brien and other ‘Bono’ Fide tax exiles:)
From the details so far emerged, this is a specific and solely focused package for Greece ipso dixit Sarkosy. No Private Sector Involvement for either Ireland or Portugal. Points 12 & 13 commit to de facto and de iure Fiscal Consolidation in the next twelve months.
Overall, Sarko and Angela have essentially told Ireland to dun do beal, pay your debts and sort out your over bloated public sector and live within your means until your public debt is back to the Eu average.
This is bad and sad news for Ireland. Feels like Finland’s treatment under the Marshall Plan.
Hi David, I really enjoyed this article/blog. I loved Superquinn & I am sad that Fergal is no longer involved & that Superquinn is now gone. In the mid to late ’80’s, I lived in Sutton & then moved to Naas & I always shopped in Superquinn. My children loved going there too. It is the ilk of Fergal Quinn that Ireland needs to run this country & Europe for that matter. However, all we have are buffoons in both! They don’t understand, or maybe they don’t want to understand, because as long as they don’t, it lines their pockets!… Read more »
The Morning After
Agh they have come home and have given us what they promised in the elections tis sure a good thing those boys were great ….the show is over now ,….its the end of the movie ..now lads put on your coats and leave …there is nothing else going to happen anymore .
Now wait a minute do I hear a ‘Moody ‘ and a ‘Fitch ‘ rumble ?
Actually, now the deal detail is coming out eg from Lucinda Creighton on Morning Ireland. As I stated above savings on Ireland’s debt burden I initially was led to believe could be approx €1 bn, this was also echoed in the Cork Examiner. But later from the taoiseach’s office this was clarified to be €650,000. But apparently only €350,000 is secured at present, the rest has to be negotiated but is ‘expected’ to make up the €650,000. Touted as a great deal, in fact its an abysmal failure. The savings above won’t even make up in real terms for the… Read more »
Calm down cbweb. yesterday was D-day, not Dunkirk thanks be to God.
As Chrchill said “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
So the moral of the story, Feargal Quinn was good, great even at retail, even did research of trends and habits in the US and low and behold he could see another trend coming, collapse, so he sold up and can now chill with his millions. The guy is/was good alright. The high street is in the dead zone, economy is tanking, unemployment is still high, and no creativity from government. I don’t know what start Quinn had in life, he was excellent at what he did, but it is that lack of excellence in Ireland which has brought us… Read more »
Brendan Howlin on Newstalk this morning said that ‘everyone in Europe knows that Ireland stands by its 12.5% Corporation Tax rate as its position as it enters any negotiation about bailout terms and conditions.’… Remember, negotiation implies some flexibility. What we should be doing is discussing the deeper implication of yesterday’s meeting, which is, as I understand it, the harmonization of basic financial criteria across Europe. Everyone seems agreed that the Euro will only survive if some basic and unviolable criteria are put in place. What are these criteria and how do they affect our sovereignty? ie What is left… Read more »
Rallies are short lived
‘ kicking the can down the road ‘ is the euphemism to selling ourselves to the EU …….so where will the can go ? To a ‘Big Panic’ …its the latest gift inside the Fudge Cake Co .
How do you recognise a Big Panic ? Dont worry you wont have time to .
You will definately feel it ….pale face is a starter followed by …..a missed heart beat ….then a shake of ice cream …after that …Pure Water is your only cure
‘Excellence’ …exactly I agree .How do you educate the culture we use to embrace that ?
The full statement
The punter who defrauded the welfare system of 250k gets a 12 yr prison stretch.How long will the staff who diddled €3 mill from a punter in Anglo get ? You get less for murder ! Fergal Quinn is a waffler, couldn’t compete with the foreign chains.Typical rip off merchant.
When a poor person robs a bank or state welfare systems gets a hefty prison sentance and made an example by the media and so called wider society for his or her actions.When one of the ruling elites golden circle of friends is caught witht he hands in the kitty well the response is quite different to avoid at all costs any investigation of any wrongdoing as further examiniation open up the can of worms and the links between business,political elites and financial links.Like the priest ffrom the pulpit do as we say dont do as we do mantra comes… Read more »
@cdweb, Forgive me for not getting back earlier with the url, but I was out and about.You managed to find it anyway. While we all accept that Ireland is not high enough on the EU Totem Pole, and while I have never supported a debt default, I am really baffled as to why Mr Kenny and Mr Noonan did not push for the Eurobonds option or at very least the backstop guarantee of the EU super fund. I cannot believe they didn’t try and it would be the least to be expected of them if they explained why this option,… Read more »
The US Federal Expenditure/Borrowing Dilemma, as described by a committee charged with finding common ground between the two main political parties in the US Congress. http://www.bipartisanpolicy.org/sites/default/files/Debt%20Ceiling%20Analysis%20FINAL_0.pdf One one of the pages there is a description of the Daily Cash Flow – In and Out. The US can no longer afford social security, or ongoing military engagements. Simply put, the money is not there. This is something which no media organization is telling us. They are instead concentrating on the “theatre” between the two parties. Actually, the real problem is the numbers – and there is a lot of denial going… Read more »
Europe’s leaders are the real masters of comic timing. So should you buy into the euro-euphoria? No, I say . Europe’s politicians are “masters of the art” of disguising bail-outs: the latest buzz phrase is ‘selective default’. “That means that yesterday’s rallies in Europe’s stock and bond markets are unlikely to last. What’s more, the bounce in the euro versus the pound and the dollar could well prove to be short-lived. So buying into the current euro-euphoria could turn out to be very risky”. What TD’s will win ? My bet is watch those who visit their shoe repair man… Read more »
Ex teacher (~ a shadow pensioner & old fogey ) MOF Noonan should tell the class electorate that there will be a ‘Sovereign Default’ or listen to us :
I am waiting for Aug 2nd. If that is not sorted, we are in a new scene completely. The reality of our junk status is merely a reflection of the junk status in markets generally.
We need to understand what we really mean by wealth today. Hint: It has nothing to do with banks or markets.
We need to understand what we mean by progress http://www.eugenelinden.com/news5569.html
Ireland – with a substantial proportion holding on by the edge of their fingers. http://www.independent.ie/opinion/analysis/the-working-poor-and-their-lives-of-quiet-desperation-2829830.html Tax increases, and a residue of inflation from the boom years, that has still not been corrected by a deflation that is practically inconsequential. Not just the income levy, but fuel tax increases, and various levies, including local authority rates and bank repayments hiking up the cost of retailed goods, has substantial numbers of people in a bind. The way out for this section of the population is not exactly great – it consists of competing with each other for overtime, which is taxed at… Read more »
Freddy Forsythe draws a historical perspective:
Is it time to scramble back under the UK comfort blanket?
Divil ye know, etc?
I suppose Superquinn and other such companies sold at the height of the boom for crazy prices were priced not on their retail profit potential but on the basis of their asset capacity to raise leveraged cash…loans for further aquisition and investment.
Would this be generally right?
Hi David, I hope things are good with you. And well done on the Bulmers! Before we go onto national problems, one ‘solution’ I have been pushing to try and get people to understand and absorb is the possibility to tax those that made a lot of wealth during the credit bubble. Its not a backtax but a tax of the present wealth. The equation of ‘the crash’ should be well known as something like thus: ExcessiveCredit/Loans -> ExcessivePrices (bubble burst) Bad Loans -> InsolventBanks -> NationalDebt But one aspect is that the Credit given out was used to pay… Read more »
I always figured that he could see what was happening. He claimed at the time that his sons weren’t interested in running the business. It would be interesting to know what they are all doing now.