A good deal
Dealz burst onto the retail landscape almost two years ago and since then has opened 26 stores with plans in the pipeline for another 10 before next April. Fiona Donnellan speaks to senior business manager Leonard Brassel about the company, its message and plans for the future.
Print12 July 2013
The Dealz store in Blanchardstown is typical of what one would expect from a large discounter. The aisles are wider than the average shop, the ceilings are higher and the value message is displayed throughout the shop floor. The difference between Dealz and some other retailers is the price point. The key marketing message of the eur*1.49 price point is evident throughout the premises and is the cornerstone of the retailer’s business. It is the one thing that must remain steadfast regardless of customer numbers, market fluctuations or volume sales.
Bringing the model from across the water
The Dealz enterprise is part of the hugely successful Poundland family in the UK. The decision to try out the model over here is part of an overall expansion plan according to senior business manager Leonard Brassel: "Poundland has a very aggressive expansion plan in the UK and looked further afield to see what other markets they would like to try and I suppose Ireland was a test bed or a trial to see if the model worked in another market. We’ve great value in the UK, we brought the model across to Ireland to see if it would work and it’s worked fantastically well so the view is onwards and upwards."
Brassel says the success of the Dealz business model in the Irish market comes down to the fact that consumers are looking for better value-for-money. "I think that value, or the importance of value, maybe has not been emphasised and we bring to the market great value. That’s the key to success; great value, great brands, amazing value everyday." The model seems to be working its magic with Irish customers. Sales and customer numbers are on the rise and plans are being made to expand the business right across the country. When ShelfLife asked about the company’s place in the Irish market, the senior business manager was a little coy. "I think it’s fair to say that we’re out-performing the market considerably. We have a key price point, we stick to it. The key message that’s driven though our buyers and our people is that we run a business on two key premises; product and people."
Brassel is keen not to put Dealz in any particular place in the Irish retail scene. "We like to think that we focus on the consumer so we consider all retailers as potential competition. Our focus is very much value orientated. You have to be aware obviously, of your surroundings in figuring out if it’s good value but number one is the consumer."
Senior business manager with Dealz, Leonard Brassel
Wide aisles, wide choice
The layout and design of the shop floor plays an important role in attracting customers. Dealz operates a wide aisle policy with plenty of space to display offers, price marks and special notices. The retailer carries over 3,000 different lines of products ranging across 17 categories. Brassel says that the layout allows customers to see clearly the brands and range of products available. Up to 50% of the retailer’s lines are established brands and all adhere to the company’s price point of €1.49. The ‘wonder wall’ element is where the store highlights some of its offerings in the snacking, food-to-go and confectionery categories. There is a large chilled offering along with specialist products like gardening and special occasion lines. Customers are constantly drawn to the €1.49 price point and other special offers. Brassel says the wide aisles are something different from other retail outlets: "In smaller shops, at times the aisles get bunched and you can have the best value in the world but you can’t see it, no-one can see it. You need that space to show the offer and I think that’s appreciated by the consumer."
Key to success
Shoppers are looking for the best value on the market and Brassel believes that Dealz is providing that value. "Consumers, generally have less money and they’re more conscious of the price of things. There’s more pressures on people, electricity has gone up, property tax, wages have been cut; you have less money in your pocket so you’re more conscious of what you spend. When you go into a store and find that you can get the Aquafresh, Colgate, Coca-Cola but at this key price of €1.49, well then it’s a winning combination that addresses their needs. People do see value and they vote with their feet and they are voting to come into our shops on a daily and weekly basis by saying ‘Look you have great value, we’ll shop with you’."
Brand recognition
Brassel says the range of established brands on offer in-store is a key part of driving business. "We offer brands and the brand recognition is a huge part of the business. You have the comfort, safety and knowledge that you’re buying a brand you can trust for an amazing price and in this country there are brands that are particular to the Irish consumer. One example of that is Tayto and Largo Foods. Largo now supplies Poundland to address the Irish market in the UK. It’s a huge part of the success of the model that people see brands that they recognise. Many of the brands that we carry are worldwide but there are indigenous brands that are very important to Irish consumers like Brennans Bread, Pat the Baker and so on. Those brands are important and that’s why it’s essential that we address that need for the consumer."
When asked how it was possible that Dealz is able to sell these established brands, along with other products, at such a low price compared with other retailers, Brassel says: "That’s a question for other retailers. Our mantra is simple and the goal is this: offer the best value to the customer. If you do that and offer decent service, people will appreciate that and even more so in this environment. Why others choose not to, is a question for them. We choose to offer the best value we can. We operate on tighter margins and the goal is volume so that’s it really."
Doing it differently
The fixed price point is the backbone of the company’s selling strategy. There can be no price increases in line with inflation or because a supplier has put up their prices. "It’s one price point, we don’t have to tier or have a price structure or all of these different things and work out how many of a particular line we have to sell, or spread the margin different ways or any of the many complications that other retailers have. We have one price point and that’s it. There’s no price changes, no fluctuations and we don’t have the luxury of changing our prices if somebody puts up the price of something. We’re essentially a single price retailer so we have to work to that." Brassel maintains that the company operates on tighter margins in order to offer the lowest price to customers. "Even though we have a fixed price point, some products have a higher margin than others and it’s that mix that we work very hard to get right."
One issue that’s to the fore is milk prices. Dealz offers a two litre carton of Irish milk for eur*1.49; significantly lower than the average price in other retail stores. The issue of milk prices is one that is constantly under the microscope with farmers saying they do not get a fair price for their product. Brassel wouldn’t be drawn on the issue. "Our suppliers are obviously under pressure and they have to put the prices up and it has put the price under pressure and we do have to do a deal with them. In many cases we just take a tighter margin on some key lines and that’s just the reality of business. Overall, it’s about volume for us and thin enough margins and it’s no different all the way down the chain. From our side, there are lines, such as milk, that we take a very tight margin on. That’s just the way it is. It’s no different to any other retailer except they have the flexibility of charging different prices."
Open door policy
There is a high percentage of Irish suppliers on the Dealz books. The company is hoping to increase its Irish suppliers in the future, according to Brassel: "We are actively encouraging suppliers to come and deal with us and increase our Irish brand presence. Since we’ve started we’ve increased the amount of Irish suppliers. One great example is Glendalough Confectionery, a fantastic success story for us and Royal County Products is another success story for us, and them and the Irish consumer." Brassel says the company operates an open door policy when it comes to doing business with suppliers and it is always looking for new business. "We’ve invested in an office here in Blanchardstown where we have Sharon Sheridan, a senior and well known buyer in the business, based here full-time with an open door policy of calling into the shop and meeting people. We encourage any Irish supplier to come into us and see if we can do business. This is the difference between us and other companies, there’s a sign outside our head office that literally says ‘come in, someone will see you’. We make fairly quick decisions on buying."
Along with the established brands in the Irish retail market, Dealz is also increasing its range of own-brand products. Several lines of own-brand chilled and confectionery products are on sale in-store with plans for more down the line. Brassel says the potential is there for expansion: "We have a mix of Poundland own-brands and Dealz own-brands, in the chilled category in particular. We’ve a range of own-brand there and it’s all Irish suppliers basically. It’s a mix of both."
Spreading out
There are currently 26 stores across the Republic of Ireland and recently Dealz announced plans to open a further 10 stores by April 2014. Brassel says the first two years of trading in Ireland was hectic but further plans are underway to continue to expand: "I think we opened 26 stores fairly rapidly and it was a busy year. It’s quietened down a bit this year and we’ve had an opportunity to bed in the businesses and solidify ourselves, trial some different ideas and things like that. That’s given everybody a chance to pause for breath and for us to work on operationally how we can improve things and deliver a better service to our customers. We still have ambitious plans."
The company has very specific criteria for potential sites for new stores and finding the right sites is proving to be something of a challenge. "Availability of sites in key locations, despite all that’s going on, is still an issue. These aren’t small shops so the sites need to be a decent size. The average size of our units is 8,000 to 10,000 sq ft so we’re looking for that." Brassel says the size of the units is important to the customer experience and plays a role in establishing the group as the first choice for its shoppers. He maintains that they will wait until they find the right space for new shops. "We’re actively trying to put the best units around the country and we’ll wait until we get the best site. That will obviously delay us going into a particular place but when we do go in; we’re in there for a long time. We’re signed into 10, 15, 20 year deals, we’re not pulling out again so we’re looking to get the best location and sign a long-term agreement with whoever it is." Looks like Dealz is here to stay.
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