Feature
Diversification
When it’s
Diversify
DIE
PUTTING ALL YOUR EGGS IN ONE BASKET CAN COME AT A COST. TIERNAN CANNON SETS OUT TO DISCOVER HOW TWEAKING OR EXPANDING A COMPANY’S PRODUCT OR SERVICE CAN APPEAL TO A WHOLE NEW GROUP OF CONSUMERS OR USERS AND ENABLE A BUSINESS TO REAP REWARDS.
A
s a small company starts out, it is often wise for it to focus its strengths on delivering a single product or offering, so as to concentrate its limited resources in one place for maximum effect. By attempting to break into several markets at once, a young company runs the risk of spreading itself too thin. However, once it has gained a substantial footing within a particular market, the time might be right to consider diversifying. Diversification of a company’s products, services or markets can allow for significant growth opportunities, and also serve as an effective means of risk management, ensuring access to alternative sources of revenue should a company’s initial market dry up.
This is precisely the experience of Mayo-based home textile-sourcing company Poplar Linens. Its business initially comprised the supply of a single type of tea towel to UK wholesalers, but after iniatial success, the company’s sales began to decline. Through its dealings with Asian textile suppliers it spotted an opportunity to tap into the market there, exporting luxury European goods to completely new markets like China. The move to diversify proved crucial to Poplar Linen’s survival and success, as one of the firm’s directors, Sean Walsh, explains. “Over the last two decades, we identified licensing as a key point of difference that made us stand out from the crowd,” he recalls. “We also noticed a trend towards the discount sector in retail in the UK, and we started sourcing non-textile products with Disney characters on them – products like Christmas decorations, shopping bags, torches, baby bibs and many other products.” Instead of simply selling a single sort of tea towel and exporting it to one major market, Poplar Linens began to offer a range of licensed towels and non-textile products to places further afield. These new offerings once again raised sales for the company, and also allowed it to diversify its market, providing further sources of revenue aside from its initial UK customers. “We started diversifying into different countries, and we now actively work in the United Arab Emirates, South Africa and Poland. In the last six months, we have shipped to one of the largest retailers in China, with some towels from Portugal. The Chinese market is showing tremendous signs of growth and it seems the consumers there want branded goods that are made in Europe.”
Joined at the Hip Poplar Linens never strayed too far from its initial product offering, albeit selling to very different regions. Sometimes however, diversification can prove successful when an individual or company enters into an entirely new sector. Joe Hayden, for example, is one of the directors of the
12 SFA | BETTER BUSINESS
012_BB 2017_Q4_Diversity.indd 12
04/12/2017 12:29