Investing in the positive

Jim Barry with Noel and Raymond McIntyre outside the new Buy Lo Store on the old Dublin Road, Mullingar

At the Barry Group conference in Wicklow last month Fionnuala Carolan caught up with Jim Barry to find out the secret behind his continuously growing business

People

15 October 2010

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It’s hard not to think that Jim Barry missed his calling in life and should have been a motivational speaker. His overwhelming positivity is almost unnerving in the current climate yet no doubt this is one of the reasons the Barry Group has been so successful in the past few years. From the formation of discount brand Buy Lo to the take-over of off-licence chain, Carry Out, to yet another planned extension on to the warehouse in Mallow, it seems that someone forgot to mention to the crowd in Mallow that there was a recession afoot.

Barry Group is set to become a much bigger player in the market and the likes of Musgrave and BWG would want to keep a beady eye on it.

“The recession has been good to us,” explains Barry without a hint of sarcasm. “It has brought us challenges but we reacted in a positive way to it. I’ve never been busier, in a good way. A lot of people are busy in a bad way, chasing problems. We decided that we needed to come out fighting. If you get into a negative mindset it’s hard to get out of it.”

Speaking about the level of expansion the company has engaged in in recent times he explains: “We realised that we needed to bring more things to the party and have other things to sell than the core that was. So by putting extra entities in our model, we have been getting a good synergy effect. Say with Carry Out we haven’t incurred the relative cost because we already have our systems in place like our finance department and our marketing department. Our cost base for operating Carry Out is way less than the previous owners. And that’s one of our strategies now – to look for more opportunity and work on a synergy model. That’s certainly worked for us so far.”

Getting in on the discount action

The third outlet of Barry’s discount brand, Buy Lo, opened in Mullingar during September with initial reports quite positive. “In terms of Buy Lo, we feel that we have created a model without huge investment. As this stage we’re happy with where we are in terms of development and the plan now is to get as many open in order to market it properly.”

The idea for Buy Lo actually came about some eight years ago while he was in America on holiday but the time wasn’t right to roll it out back then. “I saw the likes of Sam’s Club and Costco and I felt a version of that would work in Ireland. We looked at it and thought about it and the timing just wasn’t right but last year we felt the time was right. The demand for value is there and there is room for something else.

“The other challenge was that there was no point copying Aldi or Lidl in what they do. We see ourselves in the discount sector but we have put together a different offering. Our offering is mainly branded in terms of food stuffs and we put together a very clever household type range.” He says that the non-food product range in Buy Lo is similar to the type of product one would see in Atlantic Homecare or B&Q. The concept behind Buy Lo is that they don’t stock any lines above price. “The best example I can give is that we will always have 25 types of biscuits in stock. You might not get the exact brand you want the whole time but research is telling us that people are buying on promotion. In supermarkets you can see that the percentage of promotion purchasing is rising all the time. The big difference between ourselves and a supermarket is that Dunnes or Tesco would have a percentage of product on promotion, say 20% max of their products on promotion at one time. To do a full trolley you are buying 80% at full price. If you come into Buy Lo and get a full trolley, everything is on promotion.”

Barry is completely confident about the model they have put in place and says that he genuinely has no fears about BuyLo. “I don’t think anyone is going to forgot this recession for a while and everyone is chasing value.”

Growing quickly

The company’s plan to have opened 10 Buy Lo outlets by Christmas is an ambitious target by any standards considering it’s the start of October and they now have just three open. “We’re not just interested in opening a few discount stores, we want to create a brand. Now that we feel we have the concept right in our heads we want to open as many as we can. The next three are going to be Killarney, Shannon and Waterford. There are others nearly signed but I don’t want to say where yet.”

The idea is that they would only go into towns the size of Mallow (10-12,000 people) or greater and need to find suitable premises of between 12-15,000 sq ft with car parking space for around 1,500 cars. “We’re looking to negotiate sensible rent. We find the value is much better than it was a couple of years ago. We have created a model that doesn’t need a very high turnover to break even. We also wanted to create something that is not there already. If you profile the product in Buy Lo you will see there is nothing quite the same out there. And another thing we’ve done is a deal to have concessionary butcheries within them which makes it very different again to Lidl and Aldi. We have trialed this in Mullingar and we are now backtracking to the others.”

Marketing the brand

In order for Barry’s to market Buy Lo on a national basis they need to get as many open in as short a time as possible. “We’ll be very aggressive about opening and we are getting a lot of enquiries from franchisees and landlords who want tenants. A number of people in the supermarket trade are probably finding it hard at the minute to make money and are looking to get out so there is a huge amount of opportunity in the market and we think that we are in the position to avail of it.”

Unlike most, the company is lucky that it is being well supported by its bank. “We have the confidence of our bank, which is crucially important and let’s just say we are looking for more opportunity. Maybe we are fortunate or lucky but our performance was good last year and better this year in terms of how we are growing our turnover and profit.”

Reaching a crossroads

Barry felt that the crossroads for the company was around the beginning of 2009 when they had to make a decision if they were going to expand or retreat and cut back. “We made the decision to come out fighting. We have regular staff meetings and we are very open with our people and tell them what’s good or what’s bad. We had a meeting at that time and said there’ll be no job loses and no pay cuts. You hope your plan will work but you do not know until the year is over if it will be profitable. The plan worked thankfully. We were very successful in attacking our cost base. We attacked every cost apart from labour.

“I saw our competitors letting staff go and downsizing and I could see how upsetting that was for people. I think you really need your staff with you when times are tough. I probably consider us lucky that we didn’t have to make those tough calls but I think some companies made those calls when they didn’t need to.

He says that the Barry Gourp offering is in line with Musgrave but “our people make us better”. Our main philosophy is that our people are as important as the customers and we have Excellence Through People Gold Accreditation. We’re being accredited again now in January and we’re going for a platinum accreditation. We’re also entering the Great Place to Work Programme so we’re very active and not taking our people for granted.”

Taking over Carry out

In 2009 Barry identified an opportunity in the off-licence sector when he became aware there wasn’t huge customer satisfaction in Carry Out. When the examiner was appointed to the Carry Out chain Barry’s swooped in and took on the 42 off-licences and have since grown that to 52. “We already had 44 Costcutter off-licences. Obviously Carry Out is a fuller option but we always had an idea we wanted to roll out an independent off-licence.”

To facilitate this they extended the warehouse capacity by 60% and focused mainly on promotions and stock availability for the first six months. “We have the margin up 2.5% for the customer so they’re very happy. We’ve removed a lot of the cost base and we do things a lot more efficiently. We are going to the next phase now of fine-tuning our model. We’ll be looking at the wine range in a lot more detail. We’re just working on a few marketing initiatives at the moment. There’ll be a lot happening over Christmas.”

Jim Barry walks Batt O’ Keefe around the new extended warehouse

Ethics of selling alcohol

In taking on a large chain of off-licences the Barry Group is now a big player in this field and so the issue of ethics in selling alcohol responsibly comes into play. Barry says you have to compete but at the same time be responsible. “Some of the multiples are irresponsible in what they are doing. We certainly won’t engage in any wreckless behaviour but we will make sure our people are competitive.”

Happy birthday to Costcutter

This year marks 10 years of Costcutter under the Barry Group name. Barry’s bought the brand from Vantage Wholesalers back in 2000. So how are Costcutter retailers holding up in the current environment? “Business is tough for everybody. We didn’t force people into the level of investment that other wholesalers did. Costcutter are probably in better nick than the vast majority. A number of people paid far too much money for shops and far too much for revamps. We would have been far more conservative in our approach when advising people. Luckily the vast majority of our people spent a sensible amount of money. We are encouraging our customers to manage their business in a proactive fashion”

Doing better in recession than out of recession

Barry can already say that turnover will “substantially increase” in 2010 and profit will increase again. “I know that because we do weekly and monthly reports and accounts so we know exactly what’s going on. We have done better in recession than out of recession. When times are good you make money despite yourself. When you have a more unforgiving environment then commercialism and astuteness comes into it.”

Future plans for the business

Considering the amount of new investment the Barry group has engaged in in the past year you would imagine that they would be happy to slow down to catch their breath but they are doing nothing of the sort. “We have a lot going on now. We are going for planning permission for a 50,000 square foot extension and I hope to get planning before Christmas and get started early next year. It’s to accommodate the Buy Lo non-food range. There is opportunity in the non-food market we believe. Buy Lo will be part of that but there’ll also be other opportunities in the non-food market. We are setting up a company importing a lot of product from the Far East. In the long term you need to be buying your product from source. Everytime it passes through someone’s hands it costs money so it’s all about supply chain”.

Only a few months ago the company engaged in a 20,000 sq ft extension of its warehouse to increase capacity by 60%.
“We are now adding another 50/60% on top of that again. I see a lot of opportunity at the moment. I think we should be increasing it again in about 2/3 years.”

Keeing it cool

Barry says they have made a strategic decision to get involved in frozen and chilled distribution. “We’re currently examining how we’re going to approach it but we are going to do it. It’s in the early stages of the project but that’s the plan.”

The company currently employs 250 and there are plans to increase employment by up to 15% in the next 18 months.

Growing up with the business

Being this driven and ambitious means you need to have a love of what you do and Barry explains that he grew up with the business and couldn’t imagine doing anything else.

“At a very young age I was in my dad’s way. I’d be going to work every Saturday and going to work after school. I really love what I do so it’s not like work. I’ve always loved the business but the fact that we have a couple of new things at the moment has added an edge to the whole thing. It’s probably sharpening us up.”

Entrepreneur of the Year

All of his efforts are not in vain as Jim Barry has been nominated as one of the finalists in the Ernst & Young Entrepreneur of the Year Awards, an achievement he doesn’t take for granted. “I was at the judging of the Entrepreneur of the Year and there were 24 of us in the room and the buzz was fantastic. I personally do well in a positive environment. I really think we need to start thinking positively. You can talk yourself into depression. I know things are tough but there is still a lot of positive opportunity out there. More and more of our customers are reinventing themselves and doing a better job.”

You would presume someone with this kind of drive and enthusiasm for business would be a workaholic, however he also somehow manages to find time to coach a local gaelic football team and engages in regular hill walking with friends. Having three children under 18 with wife Niamh means that there is never a dull moment in the life of Jim Barry. If he could only bottle his energy and positivity and sell it, the country might be in a much better state than it currently is.

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