THE franchise concept has been part of the retail grocery business for decades and stores countrywide are now allied to large groups with huge purchasing power and a central distribution system.
But it is now set to become a feature of the €500 million-a-year Irish DIY and homeware sector following a decision by Dairygold Co-op to open 30 new stores countrywide.
A €30 million investment will see 10 company stores and 20 franchise outlets creating 600 new jobs in various locations over the next three years. 4Home, the new division set up by the co-op as part of a major restructuring programme, plans to capture a €100 million turnover slice of the market, which is growing by 15% each year.
The company announced this week that it intends to apply the franchise model and create the first Irish fully-fledged DIY/Homeware offering in this sector of the market.
Spearheading the drive is Simon Healy, a 37-year-old Cork man, who is managing director of 4Home.
He said that for many years, smaller, independent hardware and DIY retailers have struggled to compete against the major chains. But 4Home will offer them the opportunity to be able to compete on a level playing pitch in terms of purchasing and marketing power as well as the sophisticated IT systems required of modern retailers.
“We have already received significant expressions of interest from independent homeware retailers and we are confident that the 4Home brand will strongly appeal to prospective franchisees countrywide,” he said.
Mr Healy, whose studies have taken him from Douglas Community School to UCC and Sheffield Hallam University in Britain, brings an impressive academic record to this daunting task.
He holds a MSc in Human Resource Management and a Diploma in Personnel Management and is also a Fellow of the Chartered Institute of Personnel and Development.
A member of the Marketing Institute of Ireland and of the Irish Institute of Training and Development, he lectures on training at UCC and has wide experience at the cutting edge of retailing.
He started as a trainee manager with Power Supermarkets (Quinnsworth) and later served as branch manager in Portlaoise before going to Punch and Company in Cork, where he was sales director responsible for the MACE franchise.
“I then joined Tedcastle Oil Products. They had a new brand concept of a green forecourt, fantastic imagery but no shop package. But they had a very smart general manager, Eamon Brandon, a former Jet Oil executive.
“He had the same necessary vision of the grocery industry that I had. We set about building a brand to exclusively sit on top forecourts.
“In less than four years we had build a business under the Londis Topshop brand that was approaching €250 million turnover from a standing start in a very competitive industry.
“We had a very successful franchise package, very solid store design and we employed very smart people. The foundation for our success in Londis Topshop, which we want to replicate in 4Home for Dairygold, was to build it on customer service, expertise within our employees and brand values.
“It worked for us. We opened close on 140 locations within the four years under the Londis Topshop Brand. It was a very successful time for myself and for the team I had with me,” he said, recalling his period there as chief executive.
In 2002, the parent company ADM Londis, made an offer to buy Londis Topshop from the Tedcastle Group. This was accepted and Mr Healy transferred as executive director of Londis.
His main function was to oversee the integration of Londis with Londis Topshop following their merger. He was also directly responsible for the restructuring of ADM Londis management systems and infrastructure and for a complete overhaul of the finance and administration functions together with the rollout of the new Londis brand format in November 2003.
“I loved working there. It was a fantastic experience. The combined turnover was around €500 million. But, once I had finished with the integration project, I had to make a decision myself on whether I would continue in Londis and oversee future development in it. To do that I would probably have to stay in Dublin.
“What I had set out to do with Londis Topshop was to build a new brand, which I did, and I wanted to continue to grow that brand. But the challenge of what Jerry Henchy (chief executive) presented as an alternative in Dairygold was a far greater pull for me.
“I am delighted to have been appointed to lead the Dairygold retail division and build the new 4Home brand. This represents an exciting new challenge for me. I have already been involved in the development of a greenfield retail start up in Londis Topshop and I relish the opportunity to be involved in another,” Mr Healy said.
Simon Healy is again talking with an infectious passion about taking an existing brand, totally re-branding it, giving it a new personality and driving the business on. But the challenge also involves building a model similar to what had been done in the franchise business on the grocery side and rolling that into the hardware sector. He has brought some of his management team with him from Londis to integrate with the existing team in Dairygold and other recruits to develop the 4Home division.
“What we have for the brand is a very good vision of how it should look and how people should get service. You serve your customers well. You don't leave people waiting around. And you do not ignore people. It does not hurt to smile,” he said.
Stressing that it is also important to treat staff right, Mr Healy added that the company’s workforce is dedicated and willing and there has been little resistance to what amounts to a huge cultural change. Some practices have to be put right but by and large the staff have been very compliant.
“Heavy emphasis is being placed on staff training. Our research has revealed that consumers want to visit their local hardware or DIY store as much for advice and helpful hints as for actual purchases. But they find this absent in the major chains.
“We will take the expertise and helpfulness associated with traditional Irish hardware stores and combine it with the product choice, range and value associated with the major multiples to deliver a compelling customer proposition.
“We have committed a major budget for staff training in the first year and a significant investment will be made in continuous staff training,” he said.
A central distribution system to be based in a 200,000 sq ft unit in Limerick will carry 2,000 to 3,000 core lines. It will have an infrastructure through which shops can order online each week. Shannon Transport has been appointed logistics provider.
Regarding the franchise concept, Simon Healy said an unique opportunity exists for independent retailers to join a progressive DIY/Homeware organisation and avail themselves of a host of support services from individual business planning for stores to national marketing campaigns.
He said the response from retailers has been very positive so far. He said that interest had not only come from those in the hardware sector but also from grocery retailers who want other options and other business strings.