A Dealz a deal
To mark the occasion of Dealz opening its 50th store in Ireland, Jim McCarthy, CEO of Dealz and its parent company Poundland, visited Dublin and the first Dealz to open its doors. There Doug Whelan caught up with the veteran businessman to talk strategy, flattery and instinctive stocking decisions
17 December 2015
We often wonder whether it can be identified, that crossing point when a brand ceases being a new addition to the retail landscape, and becomes a destination where customer expectations are clearly defined and met, and a logo becomes commonplace. It’s a subjective thing, we suppose, whereby if you live around the corner from a store when it opens, that will happen a lot quicker than if you’re in the last town in the country to see an outlet open its doors.
These are the things we idly consider as we take in the surroundings of the Dealz store in Blanchardstown. It’s just over four years to the day since it opened its doors, the first Dealz in Ireland, and since then exactly 49 stores have followed suit. The latest store to open its doors, on Thomas Street in the heart of Dublin’s inner city, created 25 new jobs, bringing the total number of roles Dealz has created in those four years to more than 1,500.
Some more numbers from the business’ side: Since launching in Ireland, Dealz has invested more than €20m into the Irish economy, and plans to spend a further €6m in 2016 while creating 400 new jobs. Furthermore, to date Dealz has raised more than €120,000 for Make-A-Wish Ireland as its charity partner.
Whatever that crossover point is, it is certain that the company itself is confident it has passed it, and has long since begun long-term planning for consolidation of the success it has attained in the past four years. As for the customer side, it’s safe to say that the same has happened – we’ve all been there, and we’ve all had that conversation with a friend or a loved one who is on the hunt for something – a quick and easy gift idea, something for the home or for the kitchen, snacks and supplies for a party, you name it: “Have you tried Dealz?”
Strategy for success
This type of successful expansion, almost like clockwork, doesn’t happen by accident. It’s one of the things we put to Jim McCarthy, CEO of both Dealz and Poundland, the discount retailer’s parent company. McCarthy is in Dublin to mark the occasion of four years in Ireland, as well as to help launch the aforementioned 50th store.
“It’s flattering that people want to talk, if I’m honest,” McCarthy says humbly as we get comfortable in a meeting room above the Blanchardstown store. “But I do see it as an opportunity to share things about our company and how we do things, and maybe to influence thinking a bit.”
McCarthy admits that despite two years of market research leading up to the late 2011 opening at Blanchardstown, Poundland still wasn’t certain that Dealz would work in Ireland. “It was a big decision moving into a new territory,” he says, “but thankfully it took off really well.”
Indeed, take off it did. The bargain-packed wonderland that is Dealz, where almost everything costs just €1.49 and everything else is at rigidly defined price points, is a familiar sight for many consumers now, and McCarthy believes that Irish shoppers took to the store for the simple, usual reason: saving money. “Irish consumers were just used to buying the things we sell, except at a higher price,” he says. “The option of saving money, especially in recessionary times, was a relevant one, and people voted with their wallets and their purses.”
With 50 stores open in four years, that’s a growth rate of around 12 stores per year, and McCarthy reveals that once the company realised their formula was working, plans for expansion were accelerated. New business ventures are always a risk, and one should never count the chickens, but given that it was a strong business model that had worked for Poundland since 1990, it’s safe to say (retrospectively, at least) that the success was a foregone conclusion.
“We were fortunate that consumer preferences here in Dublin matched those of our UK customers,” McCarthy agrees. “It wasn’t a new area of sales we were moving in to, since a vast majority of the items we stocked in the UK would also be desired by Irish customers. So yeah we felt early on that it was a winning formula.”
That’s matching of stock between UK and Ireland stores is of course tied in with society and culture, and different to, say, the Spanish market, where Dealz is also gaining a foothold in the market. “In Spain that is different,” he says, “but Dealz Spain is certainly a product of the success we’ve had in Ireland.”
McCarthy credits the Irish team that runs Dealz on a daily basis – led by country manager Leonard Brassel – for the chain’s success in the past four years. “They have been inspirational to lots of other people in the organisation,” he says. “Before I have to say anything, they’re already thinking about how to improve it. They always believe they can do more, and that is inspirational.”
Of course, any store’s success is dependent on customers coming through the door, and it’s not lost on Jim McCarthy that Dealz’s success is thanks to them also. “You know,” he says, “when I was downstairs earlier, a lady tapped me on the arm and said thank you! She told me a store like Dealz has made such a difference to her.”
(It’s worth pointing out that on the shop floor, McCarthy was easily identifiable as Dealz “top brass” thanks to his Dealz branded tie).
“I thought, wow,” he said. “I wished I had had a camera because it was a lovely moment.”
So Dealz is certainly doing something right but, echoing the sentiment of his Irish team, McCarthy adds that there is always something the company could be doing better. “As a retailer,” he says, “you’ve got to constantly reinvent yourself. We know we offer great value, but you can only ever be certain of that when the customers are taking the products off the shelves.”
Research vs instinct
So then, Dealz didn’t come down with the last shower, we’ve established that. None of the chain’s success has been by accident, so what is the key to its vast and diverse offering? There is such a quick turnaround of specials and stock (McCarthy reveals that an average of 200 new items per week make their way to shelves throughout the year), how much research and planning goes into it? There’s no denying when you enter a Dealz, you have to stop yourself from making too many impulse buys. Jim McCarthy reveals it’s a blend of research vs instinct.
“We have traders in the UK,” he explains, “who test things out extensively and who also are experienced enough to go with their gut.”
Testing products takes place at a small number of stores, say ten. A new product is introduced, and if it sells well in those ten stores, then the sales figures are used to extrapolate a larger order to be sold at all the stores. This is the model used for Poundland in the UK as well as Dealz.
“We might sometimes lose money on these tests, if things don’t sell well,” McCarthy says, “but I don’t mind. The benefit is that if it does sell well, we can put in an accurate order for 900 stores.
“If you get an order like that wrong,” he adds, “you can end up with an awful lot of leftover stock. But sometimes you have to go with your gut and make quick decisions where there’s no time for testing.”
Attitude vs skills
“Recruit attitude, train skills.” So says McCarthy of Dealz’s staffing. The company has created 1,500 jobs in Ireland in the past four years, and has plans for hundreds more in the near future. “If someone is a bright individual who enjoys engaging with people,” McCarthy says, “you would do well in retail and should be in it.”
He explains that the company looks for these types of individuals and teaches them the importance of merchandising, of blending, of placement and so on; also they aim to teach staff how to pass this knowledge on.
“It’s one thing to give an order,” McCarthy explains. “Like, I want this here, this way. But training shows people how to give the order and follow on with WHY. I want this here, because. This way, not that way, because. This is one way of getting better and better results out of your people, because they are always training.
“I believe that every conversation you have, you’re training in some way,” he adds. “Success breeds success, and a good store manager can mean everything.”
Fifty stores is a nice, round number. But 60 is a nice number too, as is 70. “We think we can do 100 stores,” says McCarthy. “That’s our journey for the next few years. Customers love the brand, and they talk about it.
“Technology can really help,” he continues, referring to the proliferation of retail technology and increased used of social media as a promotional tool. “But, if customers are communicating your faults and you’re not acting on them, you have a real problem.
“All the answers lie with your customers,” Jim McCarthy says. “Listen well to them, and you’re already ahead of the curve.”