Pulling a profit in Letterkenny
Since joining the BWG group in January of this year, Blacks XL has seen dramatic changes to the business. General manager Lorraine Tourish spoke to Fionnuala Carolan about trading in an extremely competitive retail town
Print12 July 2013
PROFILE
Blacks XL,
Lower Main St,
Letterkenny,
Co. Donegal
Manager: Lorraine Tourish
Size: 1,000 sq ft
Staff: 10
The town of Letterkenny has seen many changes over the past five years, similar to many other regional towns around the country. Seeing small drapery and book stores and many restaurants closing their doors and not being replaced with similar businesses has been a depressing sight for those living in the vicinity. Despite this, grocery retailing seems to be thriving with a large Tesco, two Dunnes Stores, two Aldis, a Lidl (with another due to open soon) and a host of smaller convenience stores in the mix. This had made business extremely competitive and encouraged Blacks XL to align to a large group like BWG earlier this year to improve its buying power.
Tourish has been working for Jason and Sharon Black for over eight years but has been in retail since she was 18 so has a wealth of experience and knowledge of the local trade. The store is open almost 10 years and was originally a Centra store but then changed to an independent a number of years ago.
"We were approached by XL and asked to join the brand and had a few meetings and decided that it was the best option for us," says Tourish.
Since the Blacks have signed up to the XL brand, another shop up the street, formally a Costcutter, has now changed to XL too. Tourish doesn’t believe that this will dilute the brand for them but will actually make it stronger. "The fact that they changed over within a couple of weeks of us doing it implies that they were obviously impressed with what we did."
Revamping
A revamp was initiated on 14 January this year and all the work was completed in five days. She explains: "It only took the week to complete the revamp. We didn’t close at all. We are a 24 hour store so we never actually close. The refurbishment was going on until 9/10 o’clock at night and for the first couple of days it was hard but we worked through it. The customers were very understanding. The shop is 1,000 square feet but to look at it, it looks much bigger. We put in brand new shelving everywhere, new confectionery units, new newspaper units and a new mineral fridge."
During the revamp they decided to give more space to the deli and get rid of the hot food counter altogether to reflect the changing lifestyles of their customers.
"Since the beginning of the recession the hot food sales had reduced so we decided to take out the hot food counter and we now do paninis and subs in the deli and it has just taken off like a bomb. People are more into their health now. They want wraps, paninis and subs as opposed to the breakfast rolls or a dirty big fry! The deli is the biggest area of the shop accounting for a good 60% of sales."
Not only is the shop open 24 hours but the deli is too and customers can get a freshly made sandwich at 4am if they want. The 24 hour status of the shop is a real draw as there is only one other 24 hour shop on the outskirts of the town and that is just a hatch. Tourish explains that they are fully open and people can come in and even use the new seating area to eat their purchases at any time of the day or night. "We have two guys on at night time so one can jump on the deli while the other is serving." One would assume the wage bill would be quite large having to service a store 24 hours a day but she says that they actually lost money when they trialled closing at night. "You wouldn’t believe how many people we would have in between 4am and 7am. We actually stopped the 24 hour trading for four or five months and we did up the costs and we had to open again as we were losing too much money."
Other additions during the revamp included a small seating area, a new coffee doc and a Smooch ice cream bar. The Smooch bar makes it possible to create milkshakes and ice cream concoctions which the owners are hoping will see high sales if we have a warm summer.
The revamp was long overdue, says Tourish. "We’ve definitely had more customers through the door since the revamp. If you’d seen it before and after you would think it’s a completely different shop."
A strong offering
The biggest benefit of joining XL was in taking advantage of the buying power of such a big group. Tourish explains that as an independent it was very tough trying to be competitive with the likes of Aldi and Lidl on your doorstep. "We have great offers now. Last month we had five lines for one euro including Fairy Liquid, Lyons Tea 40 Pack and McDonalds Super Noodles. BWG constantly source new offers because you don’t want to have the same ones on all the time. At the minute we have Fruit Shoot and Sqeez Orange Juice. You need to have offers to entice customers into the store."
While they do their own flyers advertising the deals, there is strong marketing support from XL which supplies posters for outside the store that Tourish says definitely draw the customers in.
BWG opened a new chilled warehousing facility at Kilshane Cross in Co. Dublin last year and it has been the smaller stores around the country that have really noticed a difference in deliveries and availability of product since this development. "We get all our dairy wall supplies from Kilshane Cross. Before Kilshane Cross we would never have got the same amount of stock. And things that you ordered you wouldn’t have received. Now everything you’re ordering in, you’re getting. Your shelves are full. When we were independent we had a problem trying to get deliveries all the time.
"We have quite a large dairy wall but we don’t do pre-packed meat as we have a butchers right beside us and Dunnes Stores is a 10 second walk away so it’s very hard to compete with those. In the summer time when it’s barbecue season we might start off again."
Liquid gold
Aside from the deli, the next most lucrative area of the shop is the off-licence. Through XL they now have a very strong wine offering and have changed the way they sell wine. There are only three price points, €6.99, €7.99 and €8.99 making it simple for the retailer to merchandise and for the consumer to shop.
"People weren’t buying €10 bottles of wine anymore. €7.99 is the number one price point now. €8.99, is the most expensive. We don’t go any higher than that," says Tourish.
While they’ve always had an off-licence in the shop, a larger space was allocated to it during the last revamp.
"Basically the off-licence and the deli keep the shop going. It’s massive. The off-licence has really taken off since we’ve become an XL. Everything is a special offer like six cans for €8 or four for €4.50. Even at this price we are still getting 24/25% margin."
Karpackie is the most popular beer sold in store followed by Dutch Gold and Prazsky. There is a huge Polish community in the town and they are big beer drinkers, explains Lorraine. "Most of our customers in our alcohol section are Polish. You need the off-licence. It’s just a pity about the timing restrictions. We have to close at 10 o’clock and I know if I was going out myself, I would only be starting to think of having a drink around then. We have the area securely locked after that time but you’d be surprised the amount of people in here even in the mornings looking for drink and we can’t open the off-licence until 10.30 am. You are losing sales but it’s out of your hands. Everyone is in the same boat."
A helping hand
Thomas McAree is the XL rep for the area and Tourish has found him to be hugely helpful in the transition. "Without Thomas I don’t think I’d have been able to get through it all. The ordering process was completely different for the off-licence and I had to learn the new Kilshane system."
Although Letterkenny has been affected by unemployment and emigration, it is still a vibrant town and Tourish says that there is something on in the town every night of the week. "There is quiz night on Tuesday nights, student night on Wednesday nights and Thursday nights is always a big night out so there is something on nearly every night of the week. The students will be heading away for the summer soon and you do notice them gone but then you get the tourist trade to replace that. Most of the tourists are from Northern Ireland and we get quite a few American tourists too."
The shop is certainly geared up for serving the local community and the tourist trade and with XL on board they are finally able to compete in this tough trading environment. Now all we need is a warm summer so that ice cream sales will soar. We live in hope!
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