Penneys matriarch: ‘The harder I work the longer I live’

Top 1000: Breege O’Donoghue, The Irish Times Top 1000 Distinguished Leader in Business 2019, on her early years in Clare and the recipe for Penneys' success

Breege O’Donoghue, executive director of  Primark/Penneys at their Dublin offices, dressed in clothes by the brand. Photograph: Dave Meehan/The Irish Times

Breege O’Donoghue, executive director of Primark/Penneys at their Dublin offices, dressed in clothes by the brand. Photograph: Dave Meehan/The Irish Times

 

Sitting in a funky lime green chair in Arthur Ryan House on Parnell Street in Dublin, Breege O’Donoghue proudly declares that everything I can see her wearing cost the princely sum of € 28 from Penneys.

It’s something of a party trick by the Penneys matriarch who officially retired from the business in 2016 after 37 years as part of a tight-knit leadership team that transformed the Irish fashion retailer into a global success story.

“I’m proud to wear them,” she beams from the retailer’s head office, before adding that it often costs more to dry clean the clothes than to purchase them.

“That was certainly the case of a beautiful linen suit, which cost € 25 to buy and €26 to dry clean. But then I discovered the washing machine was the answer. That solved my problem.” O’Donoghue might be retired and approaching her 76th birthday, but she retains a strong link with Penneys/Primark (Ireland is the only market where it uses the Penneys brand) as an ambassador for the retailer.

“I’m involved in the induction of all the new senior people into the business,” she explains. “My next session is next Wednesday where there will be many people from the 11 countries in which we trade. It’s really about telling the story of Primark. What makes Primark different. What makes it tick and a couple of important things from the past about its DNA.” She also chairs two State bodies and one in the private sector, sits on three other boards , and works with the UCD Michael Smurfit Graduate Business School.

“We’re working on an MSc in retail management.”

If that’s not enough, O’Donoghue also mentors a group of women as part of the Going for Growth initiative run by Enterprise Ireland and KPMG.

“This is my fourth programme. I had a group of seven women. They each have their own business. And I mentor some other people and work with some charities as well.”

It’s a busy agenda but O’Donoghue likes to remain active. “I enjoy what I do, I love life, I love work, I’m active in the gym, I swim, I cycle, do yoga. I’m learning bridge to keep the mind active. I want to be thoroughly used up by the time I die. The harder I work the longer I live.”

Early years

O’Donoghue has come a long way from her childhood on a farm in Boston, Co Clare.

“It was a small farm. I went to school through the fields, brought the sods of turf, did all that. Plenty of rocks in the Burren. One of the jobs I had was to milk the goats before going to school. Farming’s a good nous for commerce and business.”

She went to a local two-room primary school. “The mothers did the flowers, cleaned the school,” she says. “My parents wish was to ensure that we had the best education possible given the circumstances.”

Secondary education wasn’t available to all in 1950s Ireland, but O’Donoghue was sent to a school in Gort, just over the border in Galway. With no public transport available, she had to live away from home with an “extended” member of family.

“Many people from my parish wouldn’t have gone on to secondary school because transport links were difficult, among other things,” she recalls, adding, “I would have loved to have gone to university but it wasn’t economically possible”.

O’Donoghue places great store in education, training and continuous professional development, no surprise given her extensive experience in human resources.

While working for the Great Southern Hotels [GSH] in Dublin, O’Donoghue did a commerce degree at night in UCD. “It was a four-year programme. Cycled there after work, tough holding down a part-time job but I really enjoyed it and it gave me a love of education.” She has since completed courses at the likes of Cornell, Harvard and the Smurfit business school in Blackrock, even completing a programme on corporate directorship at the Institute of Directors just two years ago.

“I had a lot of experience in this area but I wanted to align the practice and the theory and I enjoyed that”.

O’Donoghue entered the world of work in 1963 at the Great Southern Hotel in Galway. Her memory is of “really being thrown in at the deep end, and required to do a bit of everything.

“I felt somewhat daunted and that had real experience for me because it made me very conscious of how important the induction is, particularly at a junior level.”

It’s something she has put into practice with Primark. “We have young men and women [in Primark] who will have been sales assistants in our business and now they’re managing businesses, big business on the continent. That’s been through continuous improvement, education and development. They had the will and the strength and the stamina to do that. That’s hugely satisfying.”

In 1979, O’Donoghue was approached by Penneys’ legendary chief Arthur Ryan to set up a HR unit for the retailer.

“I’d set up the HR department in Great Southern Hotels, which then had 11 hotels and the catering service on CIE. What really attracted me to Penneys at the time, which had had 24 stores, was the fact that it was starting to expand in the UK. This was broadening my horizons and would be a good opportunity to learn . . . and to be involved in that development.”

Global reach

This expansion has continued almost unabated in the intervening years. Penneys/Primark now has more than 360 stores in 11 markets worldwide, and reported annual revenues of £7 billion (€ 8.1bn) in the year to September 2018.

The secret to the company’s success has been its goal to provide “value for money”, and a supportive parent in Associated British Foods, the UK plc.

“We were very fortunate with our parent, ABF. Hugely supportive and there for us through every twist and turn. They have helped us to expand. They care about the environment, they care about their people. They want to be good neighbours and they are ethically aware.

“In one case, we saw an opportunity to acquire the Littlewoods business [in the UK], which had 121 stores in strategic locations of large sizes. We were bidding with another company to share the business but as it turned out we both wanted many of the same stores. Primark wanted 41 stores. ABF said ‘we’ll buy the business for you, you take what you want and we’ll give you the property’ and that’s what happened.”

Providing fashionable clothes at affordable prices was another “extremely important” element of its success.

“Always very focused on the customer. And our people were always key. It was really like a family business with that high level of commitment. Arthur Ryan was a tremendous leader. He was hugely focused and he saw the benefit of the consumer. [Current chief executive] Paul Marchant has driven the business to new highs.”

O’Donoghue was central to Primark’s international expansion. In 2006, the company opened its first store in Spain, 14 kilometres outside Madrid in a new shopping centre.

“Before entering that market due diligence was very much part of our business. We met with the authorities, we explained our business model. The Irish ambassadors in each of the [overseas] locations has been a wonderful support for us. Whether in Berlin, Spain or France, it’s been hugely important. And we always worked in the community.” She recounts how, in Alicante, Spain, it had 157 jobs on offer before the opening and 21,000 applications.

O’Donoghue says learning about the different cultures was also hugely important for the retailer.

“We don’t want an Irish business [in those countries], we want a Spanish or French or Italian business. It was really about learning about the different cultures, the differences in customer behaviour, how they shopped, where they shopped, how they spent their money, tweaking of colours or trends.” According to O’Donoghue, it “wouldn’t be unusual” for the company to deploy 100 staff into new markets for about six weeks in advance of an opening and for several weeks afterwards.

O’Donoghue led Primark’s expansion into the US in 2015, starting with a store in Boston.

“The intention was to go into the north east where there are 50 million people in five states. There are different shopping behaviours. It’s unusual to see a supermarket in a shopping centre so the consumer would use two different shops. They shop at different times, the sizes are different and in terms of regulation, you have local, you have federal, it’s all different.”

Highs and lows

Many people wonder how is it possible for a company to produce stylish garments while selling them at such low cost.

“I know they weren’t made at the expense of employees in the supply chain,” O’Donoghue says. “I’m very happy with the supply chain. I’ve been in those factories in Bangladesh and India and China many, many times. Our business model is that we take a lower profit than others, we have long lead times to allow the manufacturer to plan.

“We encourage the manufacturers to source their garments as closely to where they are being made as possible. We work in partnerships with manufacturers in terms of training, of making them efficient, in terms of health and wellness, particularly for the women.

“We don’t advertise very much except for new store openings. Advertising is really by way of mouth. I have full confidence of the supply chain.”

In 2013 a building housing one of its sourcing factories in Bangladesh, at Rana Plaza in Dhaka, collapsed with the loss of 1,129 lives. In a previous interview with The Irish Times, O’Donoghue described 638 of those who perished as “our people”.

“That was the greatest disaster to ever happen in our industry,” she says solemnly.

“It was a very, very sad event. There were 28 factories manufacturing in that complex. Primark took leadership and it was our people on the ground. They identified [that] people want food, supplies, medicine and they want to pay their rent. That was put in place for everyone who worked in the complex. Nine months wages were paid to everybody ... and that was the length of time it took to work out the long-term compensation. Primark still has programmes working to ensure

that those who were vulnerable are still supported.”

What about the high point of her time with Primark?

“There were many. Primark’s the love of my life and still is. Opening in Oxford Street [in London] on April 5th, 2007. This was where 3,000 people queued, the traffic was stopped, where the police were on horseback at 7am in the morning. We had a dream, and the dream was to open on this wonderful shopping street.”

Opening in Spain was another highlight. “I have a love of Spain, a love of the people and a love of the language. That was a wonderful occasion. And the opening in Boston. This was a new continent and huge excitement in the business.”

Future outlook

Retailing is currently in the midst of an existential crisis, with traditional bricks and mortar stores under threat from an explosion in online shopping.

To date, Primark has resisted the move online. Why?

O’Donoghue says this is a strategy question that she cannot answer as she is no longer involved in the day-to-day running of the business.

However, she did offer this perspective: “I believe bricks and mortar will always be there as long as there’s investment and it’s an experiential experience, that it’s exciting, that it’s an environment where customers can enjoy an experience with wide aisles, there’s a great choice of product and there are other things going on.

Provide newness, provide innovation and provide experiences.

“Owners have responsibilities if they want to stay in business. They have to provide value for money, quality and respond to the consumers every changing need.” Does she shop online? “Not really. I like to be able to feel and to touch it. I love shopping and I love the environment and I love visiting shopping centres. I find it hugely stimulating.” No business interview would be complete without a question on Brexit so we close with her thoughts on this political saga.

“The Irish Government have handled it very well, in general. I’m disappointed to hear of some of the deterioration in the relationship between Ireland and the UK because I think we have a very special relationship.

“I’m saddened to see Britain go out of the European economy . . . [but] we just want a resolution. I’m hoping through some thick or thin that it is coming because this uncertainty is very bad for business. It’s bad for investment. The quicker we get on with the solution, the better.

“For me, the best solution is that Britain changes its mind, which is highly unlikely. The other solution is that Britain can leave with dignity as soon as possible. We’ll be poorer for that . . . but we’ve just got to get on and do the very best we can.”