Grocer keen to grow business

THE FRIDAY INTERVIEW:Jim Barry, chief executive of the Barry Group

AS JIM Barry takes a seat in the Morrison Hotel in Dublin, it’s not long before the conversation turns to the topic du jour for those in the retail business – the proposed takeover of Superquinn by Musgrave. It’s been something of a summer of discontent for the grocery and retail trade. The appointment of receivers to one of Ireland’s oldest indigenous retailers last month, and the subsequent controversy surrounding the announcement that Musgrave was to buy the business, has thrown the retail trade’s difficulties into the spotlight.

Barry, chief executive of the Barry Group, is reluctant to comment on the record, though he does say the deal “went through very fast”. Nonetheless, Superquinn’s problems have highlighted the difficulties facing an industry that is handling falling consumer demand, rising and volatile commodity prices and increased competition.

The Barry Group has been a key player in the Irish grocery business for more than 50 years. Though less well-known, particularly in the Dublin area, than fellow Cork company Musgraves, the privately-owned Barry Group is one of the country’s largest wholesalers and the company behind retail franchise chains Costcutter, Quik Pick, Carry Out and Buy Lo.

The company’s roots stretch back to the 1950s when Jim’s father, James Barry, started delivering ice cream, mainly in the Limerick area. He branched out into fruit and veg, bought an old mill on the outskirts of Mallow, and from there established a cash and carry business. Jim Barry joined the business straight out of the school in the 1980s.

A decade later the company moved into the franchise business, “a natural transition for wholesalers” he says. Its first franchise, the Quik Pick Group, was launched in 1996, followed by Costcutter (still its most popular franchise), the off-licence chain Carry Out, which it bought out of examinership in late 2009, and discount retailer Buy Lo which it founded two years ago.

Today the Barry Group operates its wholesale business from its 150,000sq ft distribution centre in Mallow, and has 234 affiliated stores – 127 Costcutter, 46 Quik Pick, 54 Carry Out and seven Buy Lo stores. The company, which has gone unlimited this year, made after-tax profits of about €2.57 million for the year to the end of January 2010, having dipped the previous year due to the economic slowdown. Turnover increased by 16 per cent to €241 million during the year ended January 2011, says Barry, while profits were up.

In the current environment, the profit is undoubtedly impressive, but the Barry Group is operating in an industry under pressure. The grocery sector has been badly hit, with convenience stores particularly affected as the days of breakfast rolls and premium priced to-go food have been consigned to Celtic Tiger history.

How has the Barry Group fared? Barry argues that the company’s retail affiliates have weathered the storm better than most. “The grocery market is down overall about 5 or 6 per cent. We’re probably flat. Costcutter in particular performed ahead of the market.”

He is unequivocal about the reason – a cautious approach to opening new stores during the boom. “We never encouraged retailers to overinvest in their business, either in buying the site or equipping the business. This means the Costcutter stores have their cost base more in order than some of our competitors, where an awful lot of money was paid for certain sites over the last number of years.”

As a result, only a handful of stores have closed their doors, says Barry, and then as a result of natural wastage rather than forced closures. Adopting such an approach was in the Barry Group’s interest, he says. “If we advise someone to go into business and it goes wrong, we will ultimately get caught.”

Nonetheless, the business is showing signs of a changing market. While the company does not disclose a breakdown of its figures, Barry indicates that the 16 per cent rise in turnover the company recorded last year was driven by the lucrative off-licence business, rather than the convenience sector.

Similarly, ambitious plans to open a flurry of Buy Lo stores, the group’s chain of discount stores, have been scaled back. The decision to move into the discount chain in 2009 raised eyebrows in the sector, given the dominance of international heavyweights Lidl and Aldi. How does an indigenous version compete? “Unlike Lidl and Aldi, which have an unbranded range, we offer branded products – everyday products like McVitie’s, Kellogs etc, at promotional prices, which we source through our warehouse in Mallow.”

The company has lined up two or three sites in the Dublin area and is planning to open a number of stores in the fourth quarter. Barry does not believe the entry of UK discounter Poundland into the Irish market will impact on business. “It looks like they will be operating in a difference space than us. They are more a euro store than a grocery retailer.”

Barry gives the impression of someone who is not intimidated by market changes. A finalist in the Ernst & Young Entrepreneur of the Year competition in 2010, Barry talks at various points during the interview about the need for “identifying opportunities” and being “one step ahead of the market”, a result, perhaps, of the dozens of business books he has devoured since his mid-twenties.

While Barry has been involved in the business since the age of 18, holding positions such as operations manager, head of sales and buying before becoming managing director in 2002, he now spends most of his time on strategy. One of the targets for growth for the company is to move more into the non-food hardware and household goods market, a higher-margin business than food, which has driven growth in the Buy Lo chains. He also believes there are opportunities for wholesalers in the field of logistics and distribution due to a sea-change in the way the supply chain operates. “The supply chain is going to change in Ireland. Already we are seeing that international suppliers are not as keen to deal directly with retailers. During the good times they were happy to deliver individually to retailers, but with pressure on cost, many have introduced minimum drop sizes.”

Barry believes there is huge potential for wholesalers to mop up some of this logistics and delivery market. “If you asked me a year ago, I’d say I was a wholesaler in food and alcohol. If you ask me today, I’m in procurement and supply chain. Ultimately we’re good at moving boxes. We’re good at buying.”

Barry is a gregarious individual who is enthusiastic about business. Evidently proud of the company his father founded and which employs 240 people directly in Mallow, he cites the accolades won by the business over the last few years, including being named as a winner in the Great Place To Work 2011 competition.

Nonetheless, it is obvious that Barry is a tough operator, with an unrelenting focus on cost cutting and efficiencies. Of his in-house logistics system, which moves approximately 120,000 cases a week he says: “The challenge I have given my operations team is that they’ve to operate a warehouse and transport system as good as a specialist operator would. Efficiencies are critical at the moment.”

He takes a similar approach to the sensitive issue of suppliers. The Barry Group is a key player in the Irish supply chain. Its Mallow warehouse sources product from local and international suppliers, which it supplies to its 234 shops as well as up to 600 independent operators. Does he drive a tough bargain?

“Our job is to buy product at the very best price we can, and then move that product in the most efficient way as possible. We’re constantly looking for value, trying to do deals.”

In the current environment, everyone has to accept less margin, he says. “Particularly with the arrival of international players into the market, things are more competitive. It’s the same with our franchisees. We have to be very careful who we give credit to. People get very emotional about these things, but at the end of the day, you need to look at the hard numbers. It’s a competitive market out there.”

The Barry Group is organising the first Irish Business Teamwork Awards next week in aid of The Irish Grocers Benevolent Fund www.irishbusinessteamworkawards.ie

ON THE RECORD

Name: Jim Barry

Age: 48

Family: Married to Niamh, three children.

Hobbies: Coaching kids; rugby and football. Big fan of Munster Rugby

Something you might expect: Spent his entire career with the Barry Group. Says he educated himself through reading business books, meeting other business leaders and learning on the job.

Something that might surprise: No relation to the other well-known Cork family, the founders of Barry's Tea.