MUSGRAVE'S move into Northern Ireland will help consolidate position as a major player in the independent retailing market and should act as a springboard for further growth in the North.

The company is paying £3.1 million a year to lease 21 stores from Wellworth. After eight years it has an option to acquire the stores for £55 million sterling.

Musgrave will rebrand as SuperValu stores over the next 12-18 months, spending up to £20 million on renovations. The employees at the stores will be reemployed by a Musgrave subsidiary. The deal immediately gives the retailing and cash and carry group a 10 per cent market share in the independent retailing sector. It is expected to add around £4 million in pretax profits in the first full financial year.

The stores it is leasing are in all of Northern Ireland's major towns and are producing healthy returns. The stores have annual sales of £133 million and operating profits of £8.6 million.

They comprise 50 per cent of the Wellworth business, but are that group's smaller outlets. They range in size from 22,000 square feet to 40,000 square feet.

Musgrave already has a small presence in the North since it bought four stores from JJ Haslett & Co for £4 million last year. It also added another store this year.

Musgrave finance director Mr Michael Walsh said last night that Northern Ireland provides a great opportunity for the Musgrave formula of independent retailing, offering high standard stores, convenience and value for money.

He said although competition was intensifying - in the North and the Republic - through the increased presence of British operators such as Tesco, Sainsbury (in the North) and Safeway, he was confident the group could hold its own. The SuperValu concept was aimed at a niche market he said.

Mr Walsh said the move would help the company expand further in the North, partly because of its increased presence, and would present good economies of scale in marketing and advertising.

He said retailing has not advanced at the same pace in the North as it has in the Republic and this also presented its own opportunities. He said Musgrave had been very encouraged by the performance of the stores it had already purchased.

An added attraction of the deal is that when Musgrave buys the stores it can then sell them on to independent retailers. In the meantime, Musgrave may franchise them to independent retailers.

The company also hopes to expand the Centra concept in the North - smaller stores, offering similar products to SuperValu.

Musgrave currently has 20 per cent of the independent retailing market in the Republic. Overall, independent retailers account for 48 per cent of the grocery market, with multiples accounting for the remainder.

Musgrave purchased the L&N chain almost two years ago for an estimated £29 million.

The group intends to expand its operations north and south and in Europe, but in Ireland, it is the North which probably offers the most potential for increasing its size and market share of the independent sector.

The group currently owns the franchise to 166 SuperValu supermarkets throughout the island, and 235 Centra Stores throughout the Republic. It services the independent SuperValu and Centra stores on a countrywide basis.