Once food retail businesses were family business by definition. The process of rapid consolidation, though, has eroded the soil around many family trees. Nevertheless, many family businesses-especially small and medium sized ones- have chosen to keep their family status. Their future depends on both their ability to solve internal personal conflicts and to foster their unique heritage.
Elsevier Food International, Vol. 5, Number 1, February 2002
Vincent Hentzepeter

The process of expansion and consolidation in the increasingly multinational food sector has greatly reduced the influence of family ownership in many traditional family businesses. Small and medium sized family businesses are easy prey for giants in the food retail arena, where former family owners may become stake holders. Examples of this include Carrefour and Casino in France and Metro in Germany and Switzerland. On the other hand, some of the larger food retail companies such as Auchan, Leclerc and lnterrnarche are still in family hands. In the southern parts of Europe the situation is different. Here the food retail market, particularly in Mediterranean countries like Spain and Italy, is very fragmented (except for the hyper markets). Numerous micro businesses are mainly family owned. But for how long? At the current consolidation rate, many companies will be out of family ownership in between five to ten years.

Coping with emotions
According to the New York-based consultancy Nurnberg Associates, which specialises in conflict resolution and problem solving for family-run businesses, such companies typically depend on the ability of family members to work together. Marlene Nurnberg believes that, more than in any other business setting, emotional problems, personal issues and relationships between family members and non-family business associates may be critical in determining the course of the business. Competition and rivalry between family members, or frictions in relationships between managers who are family members and those who are not, may pose a threat to the strategic course of a company. Succession planning remains another hot potato, and just as controversial is the decision of whether to sell or retain a family business.

Prejudices
In order to address the relevant issues, a holistic, tailor-made approach towards the needs of the family owners is required. Given that family cultures and structures vary significantly across the world, a good understanding of the owner-family is vital if outsiders are planning to tackle a family business's problems. This is the gist of The PRIMA International Research Report, a joint venture from the London-based international office of Grant Thornton and the Management School at Imperial College, London. The document explores the problems facing family owner-managed businesses, and goes some way towards shattering major misconceptions. For example, contrary to the belief that many family managers join the business after school with little experience of life or work, the majority joined the business after working elsewhere for a number of years. And the popular perception that family members pressure their children to join the business doesn't hold, either. According to the study it is true in only seven per cent of cases.

Family in or out
Involvement in a family business generally falls into one of three categories: 'The Family In', 'The Family Out' and 'The Family in Between'. The 'in' group thinks the business is stronger with family members involved. The 'out' group is completely opposed to this vision, and the third group, as you'd expect, takes an intermediate position. As a consequence, this group is more positive when it comes to the issues of appointment of non-family in top management functions and the acceptance of foreign shareholders.
When Albert Heijn took formal leave of Royal Ahold in 1989 having been its president for 27 years, for the first time in its history the management fell into 'foreign' hands. Pierre Everaert was the first CEO not to hail from the Heijn family. Though the Heijns still have shares in Royal Ahold, the business is no longer a family one in the true sense of the word - it's a typical example, then, of a 'family out' situation. In spite of this, the family spirit isn't dead yet according to president and CEO Cees Van der Hoeven at a congress in Paris last October. "Take the example of a family business that's run by the third generation of family members," he said. "It was a good company but for reasons of their own, the family members decided to sell it. In the end, what these people want is to be able to stand at their grandfather's grave and say 'We did the right thing'. They don't want to sell out by giving the company's name to a retailer who's totally changed its culture and management style. That's something a company like Ahold will never do, because when we acquire a company, it becomes one of our family members."

Third generation struggle

"The better family businesses can afford to take a much longer perspective than can a public caompny that is driven by a need to prove its strategies every three months." Feargal Quinn

When taking the issues such as compensation, ownership, management control and succession into consideration, it is not surprisingly that -according to Joseph Torani, managing partner of consultancy Bollam, Sheedy, Torani based in Cologne - fewer than 15 per cent of family businesses make a successful transition to the third generation. At the moment, many of the food retailing companies that were founded in the 1950s are about to enter this stage. What mentality is needed if these family companies are to survive? The German consultancy believes that families with a 'business first' approach have far better prospects than those that take a 'family first' culture for granted. 'Business first' tends to foster innovation and places high value on competency and productivity. The result in most cases is greater growth and the creation of opportunities for more family members. The family first culture, however, often results in business decisions being made on an emotional basis. Moreover, the lack of a common goal or a strategic plan can make routine decision-making impossible. Closer to the customer Despite the problems and conflicts that threaten the family business, Feargal Quinn of SuperQuinn is very optimistic about the future of his family business. 65 year-old Quinn opened his first shop in 1960 and now owns nineteen large shops and eight shopping centres in Ireland. He has become the market leader in grocery retailing in the greater Dublin area, with specialist fresh food departments one of the chain's particular strengths. Quinn has little doubt that his business will make a successful transition to the next generation. "The classic problem that faces every family business is how to survive beyond the second generation, when most of them fail or go out of family ownership. I think the first and most important thing is to be aware of the problem, and of the inherent dangers that arise with a loosening of focus from perhaps a single founding member to what is often a much larger number of family members. Another cause of trouble is the tension between family members who are involved in the running of the business and members who are not involved except in the ownership sense. At Superquinn we are only beginning to approach these issues, and I don't know how well we are going to cope with them. But as a family, we are very conscious of the problems involved in keeping a family business successful beyond the first generation, and we know we have to work at it. So I am hopeful that the outcome will be good!"
Quinn thinks there were always be room for family businesses. They are more flexible than large, international operating retail chains, are more innovative and stay closer to their customers. "I think the main difference between family businesses and public companies is their attitude to the long-term. The better family businesses can afford to take a much longer¬term perspective than can a public company that is driven by the need to prove its strategies within a succession of three-month cycles. The long-term perspective is particularly important in retailing, because it encourages you to seek life-time customer relationships rather than regarding each sale as an end in itself."

Pass on the baton
Peter Swinkels, chairman of the board at Bavaria (one of the larger Dutch breweries and a sixth generation family business), also believes in taking the long view. "What's good for the company, is good for the family, and never the other way round," he says. "This is naturally one of a family business's strongest points. Continuity is important to us - after all, we have to think of future generations. To us it is not about short term profit, but more about long term stability. We are committed to our company and to what we produce."

Family feeling at Superquinn helps keep staff happy.

There is no lack of competence in the Swinkels family. Even so, succession may give rise to tensions. Therefore Swinkels advises other family business to choose a professional approach - based on solid family agreements if the baton is to be passed. "Succession is always a much-discussed topic in a family business. But it only becomes a problem if you make it one. The Swinkels family was raised on entrepreneurship. Many family members want to and can function well in the company. And we are naturally delighted if we can pass on the baton within the family. But not at every level and not at any price. Filling vacancies with family members must not be a reflex action. This means making clear agreements within the family circle. Business interests come first. Family interests are an extension of these."
Finally Swinkels agrees with Feargal Quinn that family businesses share some unique features that are particularly valuable when it comes to reaching a life-time relationship with the customer. "I am certain that customers notice our involvement," he says. "And herein lies much of the added value that a family business can offer its customers. The critical human dimension, in an ever growing business world, will continue to pay dividends in the future."