Ringing in the changes

John McAllen, commercial director, Barry Group

Will sales prospects for Christmas 2010 and beyond bolster flagging festive spirits?” Key FMCG industry figures reveal their forecasts to Eamon McGrane.

Print

Print

News

In terms of sporting analogies, in recent times the FMCG sector has been up against the ropes, getting knocked about as one blow after another is delivered.

With Christmas looming and 2011 knocking on the door will next year see the industry spring from the edges of the ring and get back on its feet? Or are they set for another punishing year?

The Barry Group, one of Ireland’s best-known and biggest wholesalers, is at the forefront of the retail sector. Its commercial director John McAllen believes 2011 will not bring any big uplift with unemployment still high and the threat of severe budgets taking more money out of the economy leading to low consumer confidence.

Despite a plethora of austerity measures that the government has planned in its upcoming budgets, McAllen said the one thing that Leinster House can do for the retail sector is cut the red tape and bureaucracy, particularly in the area of regulation. “We don’t have any difficulty with regulation but there’s an argument that at retail level it is over regulated.”

With Christmas about to focus consumer and retailer attention alike it looks as though the FMCG sector is going to face another testing yuletide season. According to McAllen good customer service supported by promotional activity will be vital for a successful Christmas trading campaign. “The last few Christmases have been increasingly difficult and this year will be no different.”

On the controversy surrounding the below cost selling of alcohol, which many see as encouraging binge drinking and its attendant problems McAllen said alcohol was definitely being used as a loss leader to get footfall into some of the bigger multiples. “I think we all need to be responsible in how we advertise alcohol. We all know it’s a very big factor in driving sales particularly around Christmas.”

John McAllen: Biography in brief

John McAllen has been with the Barry Group for 10 years. He previously worked as an accountant. He began working for Barry’s as a wholesale finance manager. “My role is a truly commercial one – buying and selling product.”

Moving in the right direction

Superquinn is one of the country’s retail powerhouses. Nonetheless, it also finds the recession biting at its heels. Simon Burke, chairman of Superquinn said he wasn’t overly optimistic about 2011. While it looked like there was going to be some uplift in the market the continuing economic announcements have “knocked the stuffing out of it”.

Burke is hoping that the upcoming budget will “stay away from VAT” and the most important thing the government can do is try to improve consumer confidence. “If there’s more bad news let’s get it out there and be done with it and stop talking about doom. People need to know we’ve had the worse and now we’re moving in the right direction and that will help the retail business and be worth more than any tax break.”

Burke also talks up the “value proposition” for the Christmas market. He does, however, add a caveat that while value goods have their place a retailer must stay true to what they stand for. “I think what would be a big mistake is to throw out baby with bathwater and leave behind your brand credentials. Retailers need to stick to what they are good at however tempting it might be to slash quality and prices.”

One of the burning issues in 2010 and indeed over the past few years has been price fixing. Burke is unequivocal and succinct in his condemnation for such activities, saying practices of this kind were “illegal and out of order”.

Simon Burke: Biography in brief

Simon Burke has been the chairman of Superquinn for just over five years. Before that he was chairman of the world-famous Hamley’s toy store in London.

Prior to that he was chief executive at Virgin’s entertainment division. “I’ve only ever worked at any job for the first time. I’ve never worked in the same area twice – but I don’t know what that means,” he said laughing.

Stephen O’Riordan, chief executive, Londis

No growth until 2011

Stephen O’Riordan chief executive of Londis has an equally gloomy forecast for 2011. “I think it’s obvious that the upcoming budget will take a further amount of money out of the economy. Domestically we won’t be seeing growth in 2011. Retail demand will continue to be under pressure and we’re in a very competitive environment.”

One issue that O’Riordan believes the government needs to address is the area of Joint Labour Committee (JLC) pay rates. This controversial question of pay has been hovering over the sector for quite some time. Now, as the country is tonsil-deep in recession this is a thorn in the side of the industry that is getting sharper and more painful. “I’ve no objection to the minimum wage,” said O’Riordan. “But putting a premium on it for the retail sector is a ridiculous proposition for this day and age. The JLC applies a premium to the minimum wage that we have to pay. It’s not sustainable to keep it going in this financial climate.”
Like other retailers, Londis is priming itself for Christmas and “strong value” will be the cornerstone of its approach. “This year we will be particularly strong in alcohol and confectionary. Retailers need to continue to offer value to the customer and good customer service as well – that is still very important.”

Stephen O’Riordain: Biography in brief

Stephen O’Riordan has been chief executive of Londis for seven years. In previous roles he worked for the Ted Castle Group and the Punch family in Cork. Initially he trained as an accountant in Ernst and Young. “I’ve moved around a bit and we’re all learning new things at the moment.”

Opportunities in 2011

Well-known wholesaler Stonehouse, the home of Costcutter, Quik Pick and Gala, was formed at the start of the millennium when the boom was picking up steam. Now faced with a deep and seemingly bottomless recession it is seeing many changes in the FMCG landscape.

Nonetheless, according to its CEO Tom Shipsey there are going to be opportunities in 2011 particularly for his organisation. “Many suppliers are cutting back on their direct accounts and can no longer operate to old delivery schedules and will have to rely on the wholesale trade to become their logistics provider.”

Regarding the onrushing Christmas trade, Shipsey advises that all retailers have enough merchandise on premise to fit the demand. “With the way Christmas falls this year it is imperative that retailers/publicans have sufficient stock to get them through the week after Christmas. All our customers are keeping very tight reigns on stocks. They need to contact our members to discuss Christmas opening and delivery times to ensure they maximise, what I believe will be, a good Christmas trading period.”

While not openly welcoming the NCA’s call for new competition in the market, Shipsey is bullish about its prospects. “The market is extremely competitive another competitor will not make any significant difference to how we operate.”

Tom Shipsey: Biography in brief

Tom Shipsey has been CEO of Stonehouse since the company formed in 2000. Before that he was CEO of National Wholesale, and commercial manager of Keencost.

Get credit flowing again

Willie O’Byrne, managing director of BWG Foods sees a challenging year ahead in 2011. He said the focus for next year should be on creating the stimuli to encourage those consumers that have become savers, to release some of that capital back into the economy.

O’Byrne said the government needed to examine ways to get credit flowing again in 2011. “Small businesses are the lifeblood of local economies. Credit facilities which allow these businesses to continue to innovate and ride out the economic storm will be crucial in positioning our retailers and their businesses for the upturn.”

On the subject of Christmas, O’Byrne believes that it will provide a much needed boost to the retail sector. “We believe this year will see a continuation of some of the trends of the recent past. Christmas should see a further upturn in the sales of own-branded products across our store network.”

Willie O’Byrne: Biography in brief

Willie O’Byrne has been MD at BWG since 2009. He has been managing director of Mace since September 2008. He joined BWG from O2 Ireland where he was head of wholesale business. Prior to that he held senior positions with Transaer, Irish Distillers and BWG – he was cash and carry director with the group in the mid-1990s.

Related Articles

The ShelfLife May digital edition is now online! →

Food and Drink manufacturers ‘facing ongoing cost pressures’ →

C&C Group posts 5.7% fall in full-year revenue →

Clean Cut Meals announced as official GAA/GPA ready meals partner →