Low-profile department store chain aims to put its name on the map

One of Ireland's largest but lowest profile independent department store companies is planning to grow both bigger and better known. Heatons, established in Athlone in 1946, now has 20 outlets, the most recent of which opened in Lurgan, Co Armagh, last March.

Originally, the business concentrated on processing wool for suit material but soon opened a separate factory shop to meet customer demand. Since then, Heatons has gradually evolved from a manufacturing to retail base but its present expansionist phase only began after a management buy-in in 1995.

At that date, the managing director John O'Neill, financial director Sean Flanagan, and a buying director Mark Heaton, made what Mr O'Neill describes as "a considerable investment in the business which led to our growth with new stores and refitting and modernising of existing premises." The company's original chairman, Hubert Heaton, has remained involved as non-executive chairman. John O'Neill originally joined Heatons in 1986 and says one of his first acts was to close down non-profitable outlets, reducing the number of stores from 11 to eight within a year.

One of those premises was in Navan, which ironically is now among the towns targeted by Heatons as a possible site for a new store. The company recently produced a brochure showing not just where all its current premises are located but also the major urban centres in which it would like to have a presence. These include Cork city and suburbs, Galway, Ennis, Naas, Belfast city and suburbs and Sligo.

Heatons has no east coast outlets between Dublin and Waterford or between Dublin and Dundalk and so finding premises in this area would appear to be a priority.

In all, there are 25 such centres marked countrywide. Heatons is opening new outlets in Cookstown and Downpatrick later this year and hopes to expand further in the North. Since the 1995 management buy-in, the company has doubled its business and has an expected growth of 25 per cent in 1999; Heatons's growth plan envisages turnover to double again by the year 2002. Mr O'Neill sees the turnover for this year to be about £40 million.

One of the factors inhibiting Heatons's ambitions is the lack of suitable sites. The company is looking for shopping centre and main street locations with a minimum 1,000 sq m ground floor retail space plus up to 300 sq m of stock/staff back-up space.

Mr O'Neill says that although Heatons has an outlet in Dublin's Jervis Centre, "developers seem to prefer UK multiples to Irish retailers; we're one of the very few Irish people in the Jervis Centre. We find it very difficult to find sites at the moment. Possibly there's a perception that what's foreign is better."

However, the company's own rapid growth would suggest otherwise. John O'Neill ascribes Heatons's success to its emphasis on value for money and offering consumers a quality product at the best possible price. He estimates that at least 80 per cent of all clothing carried by Heatons is produced exclusively for the company; this figure is set to rise to 100 per cent in the next few years because "this offers more control over quality and also the specifications of garment". The lines of home textiles and homeware that Heatons carry are also own-brand but not those of toiletries and toys which would instead be labels familiar to most consumers.

Mr O'Neill says that particularly in relation to toys, "we won't sell unless it's a recognised brand name". He adds that in order to maintain Heatons's reputation for offering goods at the best possible price, toys and toiletries in the company's stores are often sold at up to 30 per cent less than the usual price elsewhere.

Although the most obvious competitors in this field are Dunnes Stores and Penneys, John O'Neill argues that by putting the focus on value for money, Heatons is filling a gap in the market which has arisen as other retailers have opted to move upmarket. He points out, "effectively, an opportunity has been left for us. Our sector - the value-for-money discounters - is the biggest area of growth now in the UK." Appropriately enough, the Heatons slogan is Look No Further.

One other reason given for Heatons's growth is the relative youth of the management team now in place; John O'Neill says that at 43, he is the oldest member of this group. "It makes a big difference; everyone knows what we want to do and to bring the business on for all of us." In addition, "last year we introduced a form of profit sharing for our staff and that's made a big difference."

With expansionist plans now underway, Heatons will also be raising its profile among shoppers. John O'Neill explains : "We took a decision when starting to revamp the chain that we'd get what we had right before we raised our profile." Obviously, the consensus is that the overhaul has been successful because the company recently employed a new group marketing manager, Nuala Gonzales, who used to work with the Liz Claiborne clothing company in the US.

Heatons will be spending in the region of £750,000 on advertising this year and this figure is set, like the business itself, to grow in the near future.