Convenience will blossom
XL Stop & Shop has opened its 100th store in Ireland with independent retailer O’Keeffe’s Oil. A household name in North Cork and East Kerry, O’Keeffe’s Oil looks forward to celebrating its own centenary
10 November 2008
The O’Keeffe family has been in business since 1909, operating in a number of different areas. Primarily, the company distributes oil from a refinery at Whitegate in Midleton, County Cork, providing domestic home-heating and commercial fuels for the hospitality industry, as well as for forecourts and quarries, with its own brand ‘Fuelsave’.
The group which employs between 30 and 40 people overall, is also an Esso distributor and has several hardware and auto-motor stores. Kieran O’Keeffe, the man in charge, is actually no relation to the original O’Keeffe founders, despite the fortuitous surname. He tells me however that John O’Keeffe, the only member of the family now involved, is also an undertaker, “so we look after the living and the dead!”
O’Keeffe’s Oil opened the XL Stop & Shop c-store and forecourt in Rathmore, County Kerry two months ago. So how does Kieran find running a convenience store compared to his other business interests?
Firstly, while he maintains that service, quality, price and reliability are four crucial basics any business should offer customers, he does concede there’s a difference in the technical knowledge involved. “In the convenience sector, customers need very little advice, whereas with somebody starting off buying a house, who needs a plumbing quotation or a new appliance, that’s a completely different ballgame. The amount of time that you’d have to spend with that customer to make a sale compared to a customer in the shop to make a sale, there’s no comparison.”
However, Kieran feels that the XL Stop & Shop team has been able to offer him the technical expertise that is required in setting up and running a c-store. BWG’s Val O’Meara says this includes advice on “back office systems, promotions, point of sale, shop plans and layout design,” helping to take the pressure off an independent retailer. “We discuss what the retailer’s needs are and try to mould those into the actual available space and budget,” he explains.
Speaking of technical help, the new store’s computerised analysis system is invaluable, says O’Keeffe. Using a leaders system, he receives weekly price downloads from BWG. “We stick to the BWG prices, we don’t price our things individually in the shop. We print off the labels every week and change the shelves. That is a big advantage, I think, for us in dealing with BWG.”
Having price margins set by experts can save time and offer reassurance that he is offering a competitive price moreover. This is especially important “for a manager who is managing a lot of businesses, to know that the margins are set and I’m not relying on anybody else to put the margins on,” he comments.
He also finds: “Computerisation is great because you can get the busy times during the day and know when to put on extra staff.” The business invested heavily in its system three or four years ago, spending between €200,000 and €250,000. Kieran believes: “It’s all paid off…the tighter anything can be within your tills, your hours, your cameras. That’s key to any shop.”
Cut price petrol and fuel
One area of pricing however which, not surprisingly, Kieran is most keen should be competitive, are his fuel rates. A large billboard at the side of the shop advertises “Cut price petrol and diesel,” and Kieran sees this as a key advertising strategy. “I think people are very, very price conscious and I would say 90 or 95% of people look at the sign and if your price is right they’ll come in.”
For Kieran, this is the most important factor in generating footfall. “The fuel price is what’s going to make them stop. Obviously the look of the building, if it’s well kept, and whether the forecourt has plenty of parking, will all contribute. But I think the initial thing that gets the person to stop is the fact that the fuel price is competitive.”
This is especially important at a forecourt such as Kieran’s which benefits greatly from passing trade; its best-selling categories being soft drinks and confectionery. “Our business would be 60% local and 40% passing trade,” says Kieran, “And in the summertime tourist season, this would probably be reversed, where the trade would be maybe 60% passing trade and local around 40% of turnover; the forecourt being on the main road to Killarney.”
Of course, for a business that specialises in oil, it’s also crucial to be seen to be leading the way in fuel quality and price. Kieran notes that another important reason why forecourt customers choose them is the quantities they can offer.
“We do what’s called split loads. Whereas most major companies would require you to take 35,000 or 40,000 litres of fuel at one time, we’d maybe take 10,000 or 15,000 and then we’d make up another 10,000 or 15,000 litres to another station. Very few companies in Ireland are offering this ‘milk-run’ service.”
Convenience will blossom
With such a prominent main road site, O’Keeffe believes that his XL Stop & Shop will not suffer from the effects of a recession. Instead he comments: “I think in any form of a recession a convenience business will blossom more than a big store where customers do a trolley shop, for the reason that people will just buy the things they need in a local shop.”
His “only difficulty” he says, has been that in other areas of the business, money owed by customers has been slower to come in. He also notes: “The Celtic tiger of the building boom didn’t really hit this place that much. There was obviously an expansion in the town but nothing compared to other places, so that obviously has a huge bearing, and people who had more of a building boom would be greater affected now.”
He views . “Staff have a very good relationship with the customers and we like to think that there’s always a friendly atmosphere.” He adds: “People have busy lifestyles and I think the important thing is to get people in and out as quickly as possible, that they aren’t standing at the counter waiting around.”
Kieran also believes his relationship with staff impacts on their attitude. “It’s a package, one feeds into the other. I like to think that I can give people a good quality of life from their work, with respectable wages and a good working environment. I think that will feed back to yourself. If the workers are unhappy with the management, then the customers will get the brunt of that as well,” he comments.
The future’s bright
With strong staff behind him, Kieran has an optimistic outlook and hopes to “grow again” in the future. “On the convenience side of the business, we would hope to open more shops within the next year or two years. It suits this company in two ways; because we have access to fuel and our own delivery trucks, and the fact that we have set up an XL Stop & Shop means we know how to run one and could move the model somewhere else.”
XL Stop & Shop is facing the future with optimism also. “The future looks very, very bright for our own group, says Val O’Meara, commenting: “At our current rate of expansion, we hope to have between 108 and 110 stores developed by the end of the year.”
Business development manager, Colm Fitzsimons reflects on the recession, saying: “It certainly doesn’t seem to have hit us; we’ll open between 35 and 37 shops this year depending on builders. There’s plenty of them around so we’ll be coming in with an even higher figure of openings this year than last year.”
“Certainly on greenfield sites there has been a slowdown as people have found it more difficult to get finances and we’ve had a couple of projects that went into next year as a result of that, but in existing shops and renovating shops, even gaining stores from competitors, it’s been very good for us this year.
“One hundred shops in two and a half years is a tremendous achievement. We’ve recognised that and are bringing along new people all the time. We just recently brought in two project co-ordinators and with the acquisition of Mangan’s, we’ll have more people coming on board to grow the XL Stop & Shop brand further…With an addition of €240 million into the business, we’re recession proof for a few years.”