RETAIL EXCELLENCE IRELAND AWARDS 2010
Three Wise Men T
he Sunday Independent sat down with three big players in the Irish retail industry, Ian Galvin, Bobby Kerr and Ivan Yates, to get their thoughts on the current state of the industry and what they think the future holds. Ian Galvin is chairman of Aurora Ireland, which manages four major UK fashion brands here: Karen Millen, Coast, Warehouse and Oasis. Bobby Kerr is chairman of Insomnia Coffee and a dragon on RTÉ’s Dragon’s Den. Ivan Yates is chairman of Celtic Bookmakers, a former minister for agriculture and presenter of the Newstalk Breakfast Show. The lively discussion took place at Bang Restaurant, on Merrion Row in Dublin. Sunday Independent: The three people sitting here are success stories in their own right. How have you each weathered the storm? Tell us anything you might have learned about retail in this climate. Bobby Kerry: We painted all our shopfronts recently, and that’s almost
A roundtable debate with Ian Galvin, Bobby Kerr & Ivan Yates
a subtle way of saying, ‘We’re open for business’. You’ve got to keep energy in the business and keep refreshing it. In the current climate you’re on permanent sale. At Insomnia Coffee we always have two or three strong promotions, which ultimately lead to around 50 per cent of our overall sales. The price of a coffee hasn’t changed in two years, but the price of coffee and a sandwich has gone down from around €7 to €5, for example. The consumer now is really driven by value, and we have to deliver. The only way we’ve been able to accomplish that is by taking costs out of the business – negotiating with landlords, letting staff go. It’s painful but we’ve readjusted our model to the current high-street trends. Ian Galvin: What we’re doing now with the Aurora brands is actively reinvesting in our shopﬁts – making them more attractive and appealing so people will be drawn in – and we’re thinking outside the box in terms of new promotions.
For example, we reopened two stores in Cork and tied that in with Xpose on TV3. We ran a competition on television for a week, and had brilliant trading. We’ve accepted that our 2008 ﬁgures will never happen again, 2009 has happened, so in 2010 we’re keeping our costs down, and reinvesting in the brand experience. Ivan Yates: The retail betting business is a little different. The most analogous
There are three sets of people you have to keep happy in the retail business. The customer, the people you work with, and your boss – Ian Galvin
industry would be the pub trade, and that has been hit hard. For us, the decline from the top of the market, in the ﬁrst quarter of 2007, to today, would be around 35 per cent. There’s been a migration online and away from betting shops, so part of it would be that, and part of it would be the general decline in the economy. The biggest thing we’ve done, by far, is reduced our overheads from 17 million to under 12 million. A downward correction in the economy is occurring. There’s pain for everyone and costs are being reduced everywhere. With one exception – rent. All our shops are leasehold. We have a situation where property values are way down, but the law is on the landlord’s side and so we can’t alter our leases. It’s a huge problem. Sunday Independent: What is the current state of the retail sector generally? How can the sector go forward? Ian Galvin: We’re working with our staff to try and create a personalised experience for the shopper. A smile and a
RETAIL EXCELLENCE IRELAND AWARDS 2010
5 have been three years ago. So once you’ve got that bright idea and that way of bringing it to the marketplace, off you go. I’m really encouraged by that. Ian Galvin: On Ivan’s earlier point, about the growing power of big chains, I think he may be right in one sense, but that environment brings whole new opportunities. Starting up a business now, you have to really look at your competition and produce something that’s going to stand up against the bigsupermarket environment. Creative retail and creative thinking is where we are at. I think there’ll be a trend back towards individualistic offers. The big international brands, while they’ll be powerful in shopping centres, you’ll see some individuality coming back onto the high street. In Ireland we’re still small enough to stand out and to be unique, to be distinctive. I was at a talk recently and one of the speakers said that what you need to do is think big, start small and move fast. Get your big idea and be totally passionate about it, but start small and establish a niche. And especially with changing technologies and e-commerce, it’s important to move fast, get your idea out there before anyone else.
Left to right: Ivan Yates; Declan Carlyle, Deputy MD Independent Newspapers (Ireland); and Bobby Kerr [In the foreground: Ian Galvin makes a point]
If you’ve got the right business model and there’s a market for your product, it’s actually the best time to open a business – Bobby Kerr pleasant greeting are so important now when you walk into a store. In the boom time, people just said ‘I’ll have these ﬁve items, and here’s the credit card’. You didn’t have to actively sell the customer anything, whereas now you do. The old-fashioned side of retail, in terms of customer service – helping people ﬁnd their size, going to the ﬁtting room with them – these things are back in a big way. The retail trade is always about people. There are three sets of people you have to keep happy. The customer; the people you work with, because you have to get on with them; and your boss. Bobby Kerr: For me retail is about disposable income, it’s about people having money to spend. I’m positive. I wouldn’t be in the retail business if I
thought there was no future in it. But I think we’ve got to create a climate that will get people spending again. We’ve got to be competitive, we’ve got to offer value, and we’ve got to offer better customer service than we ever offered. But we need that hand in glove with a climate that will encourage people to at least visit our shops. Ivan Yates: An absolutely fundamental principle of any business is excellent customer service. I also think everything’s value-driven. People have to reassess their spending power on the basis of what they can afford. But four businesses a day are closing their doors, and I don’t think you can say that’s simply because they lack customer service or commitment. We’ve suffered a 20 per cent contraction in the economy, and do you know what? There are too many pubs, there are too many betting shops, too many dry cleaners, too many boutiques. Rationalisation, mergers and acquisition are going to be the next phase of the recession. You will see the top couple of performers in each sector actually increasing their market share, as smaller businesses that can’t compete on price or ﬁll a niche disappear. I’m sort of the view that stores like Tesco will rule the world. In other words, for your big weekly shop – essential items – you will go to where the best parking is, you will go to the biggest scale of operation with the widest choice of brand, so you only have to go once.
Sunday Independent: What advice would you have for young entrepreneurs entering the retail sector today?
Sunday Independent: What new opportunities does e-commerce provide for retailers and shoppers?
Ivan Yates: My advice would be very practical. I think in the present environment anyone would be illadvised to give a personal guarantee. If someone puts however many thousands in to start up a business, that should be their maximum exposure.
Ian Galvin: E-commerce is now 10 per cent of our business. All our brands have phone apps, and you can shop on your iPhone in any of our stores. And now you can reserve and collect with us online. If you’re in London on Sunday you can reserve something and collect it in Waterford on Tuesday. I’m not saying technology or the internet is increasing any sales, but it’s changed the landscape and the dynamic behind our business.
Bobby Kerr: If you’ve got the right business model and there’s a market for your product, it’s actually the best time to open a business. But you really need to research the market to know whether there is a market for your product or not. If you can ﬁnd a market, your start-up costs – even from the point of view of accountants’ fees and solicitors’ fees – are far lower now than they would
People are having to reassess their spending power on the basis of what they can afford – Ivan Yates
Bobby Kerr: I think it’s a different dynamic for each business, but you certainly need to be online in some format. Our website is very valuable – people want to know where our shops are, they want to know where the coffee’s come from. And we can sell our branded mugs online, coffee for the home online. You’ve got to be in there, because your competitors will be. Ivan Yates: The thing about technology is it’s always moving and developing. If we were to have this discussion three years ago about what would you invest money in, it would be very different to today. So I think what Ian said about moving fast is very important. What I’ve learned from this recession is that you can’t put your eggs in one basket. As Bobby would know – you need to be able to think like a dragon!