‘Brexit forced us to reinvest in our own market and grow market share here’
Brexit Proof: Rathwood MD James Keogh on preparing for the ‘complete unknown’
Thomas and James Keogh of the Rathwood home and garden furniture business. The company is expecting turnover of €6.5m this year – ‘unless Brexit causes calamity at the end of March’.
Rathwood is primarily a home and garden centre in rural Carlow with a garden furniture business that is expanding here and abroad through online and retail stores.
What was your reaction when you heard the UK had voted to leave the EU?
It came as a genuine surprise. It was the complete unknown of the implications that was the scary part.
How is your business likely to be affected?
Customer sentiment is integral to our business and the referendum result, I felt, would cause uncertainty. And over the past two years this has been borne out. A hard Brexit or a no-deal Brexit will hurt the agriculture community very hard and they are the core of our customer base for visitors to Rathwood or purchasers of our garden furniture.
We employ 240 people at our peak at Christmas, which is equal to 150 full-time jobs. Our turnover will be €6.5 million this year unless Brexit causes calamity at the end of March.
How much do you rely on raw materials or markets north of the Border? How much on Britain?
We source a lot of retail products from the UK and we started to make a supplier shift away from there in mid-2018. We now source most of our imports via Rotterdam. It adds a little to the cost and means longer delivery time. However we had to do it.
We found our UK business struggled with the change in exchange rates and exports to the UK have fallen on the back of reduced confidence over there. But it forced us to reinvest in our own market and grow market share here in Ireland, which has proven to be more successful than anticipated.
We had been doing online and delivery sales of up to €500,000 in the UK market and it had been growing. Because of Brexit, we concentrated efforts on the RW garden furniture brand in Ireland opening outlets in Dublin, Belfast, Mullingar, Bray and Cork with Coleman’s.
We don’t turn away orders from the UK, which we continue to ship from our warehouse in Tullow. We never planned on a warehouse in the UK as it would mean loss of control over product quality and delivery times.
When did you begin preparing for Brexit and what contingency plans have you put in place so far?
We actually made a decision to map out our plan straight after the referendum results came out. We worked closely with [a Carlow LEO] consultant Brendan Byrne to construct a plan to make ourselves “Brexit ready”. But the only real definite finding we could make is that we wanted to reduce our exposure in the short term to the UK market.
Are you examining new markets, suppliers or distribution routes?
We used to transport a lot of our furniture through the UK but we now tend to transport through Rotterdam port instead.
Does Brexit present any opportunities for your business?
I’m always one to try and spot an opportunity in any situation but, to date, I haven’t seen any angle that Rathwood can gain from Brexit at the moment. It’s open season and I don’t want to be in the crosshairs.
When do you expect to be Brexit ready?
I think as long as it’s not a hard Brexit, we will be ready. My main fear is for the agri sector here in Ireland and the possible effect that will have for customer sentiment. A lot of our furniture is designed for farming families.
What’s your best and worst-case scenario?
Best scenario is a return to vote again on the exit; worst case would be a hard Brexit with difficulty to access goods.
Are you stockpiling goods/raw materials?
We have decided to ship our furniture stock 60 days ahead of normal, so yes we have stockpiled our stock.
How might the Government and the EU help ease the pain of Brexit for your company or sector?
I think the Government needs to work closely with businesses on a local level and try to portray confidence in our ability to attack this issue as a country and EU member. Let’s face it, the Irish economy is barely getting consumer confidence back since the financial crisis so we need political leadership to sustain confidence.
In a practical way our stockpiling of materials and of finished goods all costs money in terms of working capital and the EU should be able to meet that cost for business and farmers. A cheap credit scheme would help us all.
How do you think the Irish and British governments have handled the Brexit negotiations?
To be fair to Simon Coveney, I have to admire the way he has handled the talks. I think the UK government is struggling to grasp the seriousness of the situation.
In five years’ time, how will business have changed as a result of Brexit?
I think that entirely depends on the short-term events. In two months’ time, we will all be able to make a more informed decision.