Since we last spoke, the Barry Group has been rolling out the aforementioned sub-brands and fine tuning them to ensure that they work for the group and for its customers in as many stores as possible across its estate. “We haven’t been introducing new food or beverage concepts,” says Barry. “While we are working on two new sub brands in the fresh food-to-go area, which will be announced in February 2021, we believe that next year could be a difficult year, so we are challenging our retailers who haven’t yet introduced our existing sub-brands to roll them out in their stores to entice new customers and extract greater spend from their current customer base.” It is all about ensuring that the Barry Group retailers are prepared for 2021. “With the challenge of Brexit and the expected recession, we are asking our retailers to review the services that they offer our customers, so we are encouraging them to broaden their offering which, we believe, should lead to greater turnover,” he says. “We want our retailers to get ahead now and introduce as many of our sub-brands as possible. For example, some of our stores have a very successful pizza offering and we would encourage more stores to try that, so we will be looking at the full list of options and identifying certain stores that could take on more options that could improve their turnover and make them more of a standout retailer in their community.
We want to ensure that our stores are the premium stores in their locations. We also want them to add in some of our other services, such as laundry and our online retail option, which will help to insulate them from the hit of a recession that is likely to come next year. Brexit will have a limited impact on our stores, but we are very concerned about the recession, so we are trying to get our retailers to review their offerings and add to them as part of an overall strategy for next year.”
Online Retail Business
During the early weeks and months of the Covid-19 pandemic, their food-to-go operation took a major hit, but Barry says they are now seeing a strong recovery across their estate and they are hoping for a further boost when they launch their two new sub-brands next year. They are also bullish about the impact of their online retail business which, he says, will be available shortly. Unlike other grocery retailers that rushed into the online retail space over the last six months, the Barry Group didn’t feel the need to do home deliveries or take orders via email during the height of the pandemic, but they are now promoting the online side of their business. “We have been reviewing the provision of an online shopping service for quite a while and we now have the right model, so it is the right time for us to go online,” says Barry.
“We are trialling online retail for our Carry Out franchise, so we will have an online ordering capability for Carry Out soon, and the plan is to have an online shopping offering for Costcutter in 2021. We had to wait until our IT partners had the proper infrastructure to make it viable and cost effective for our retailers. We now have a clever model that allows independent retailers to go online for a moderate price.
”Is online grocery shopping something that Irish consumers will continue to embrace long after the pandemic is over? “I think that consumers are looking for a lot more home shopping, so when you have local retailers that can serve a local area economically, I think online shopping will be a significant part of the Irish grocery retail business over the next few years,” he says. “We are expecting good growth from our food store and supermarket customers in terms of online retailing for next year.”
Expanding the estate Costcutter currently operates approximately 100 stores around Ireland. “Some stores traded well during Covid-19 and they have held onto that business, some of our forecourt sites took a hit, but the vast majority of them have come back to pre-Covid levels, and we have a small number of city centre stores that are still struggling,” he says. “However, our estate is more rural-based than city centre-based, so overall the vast majority of our stores have traded well during Covid-19 and they continue to do well.”
Like many other retailers, the Barry Group had plans to further develop its store footprint this year but Covid-19 forced a change of plan. “We had agreed that quite a lot of stores would open in the first four months of the year, so some of them were parked up, but we are now implementing those plans,” he says. “Our store development team are back in business and we will be working on a lot of store redevelopments and new stores. We hope to add 10 to 12 stores to our estate between now and Christmas. Our store development team, led by Sean Hunt, is very busy at the moment, and I see that team as one of our many strengths as a business. They lead all of our store development projects, designing and kitting out the stores and bringing them to turnkey, and then our account manager steps in and works with the fresh food and merchandising teams to organise the systems and processes for the new store. The account manager plays a key role in getting all of our new stores off the ground for the first three or four months and also builds a strong relationship with the retailer, carrying out regular visits and phoning them regularly to discuss any issues that may arise.”
According to Barry, the market is quite buoyant at the moment in terms of people wanting to open Costcutter stores and those who want to change wholesalers. “We are dealing with a lot more enquiries than we normally would, so it looks like the first half of 2021 will be extremely busy,” he says. “We are engaged in a number of discussions with people who aren’t happy with their current wholesalers and we are confident that they will come to us shortly. I think that is down to the strong service that we provided during Covid-19. We outperformed our competitors in that regard and that is standing to us now.” Duffy’s Costcutter Castlebar The Barry Group’s most recent store opening took place in Castlebar in August, when Duffy’s Costcutter opened its doors for trading. Owned by the Duffy family, a local and well-known business family in Castlebar, the store has been built on an old site that hadn’t been operational for many years but was owned by the Duffy family. “The site had been a forecourt site in the past and an opportunity arose for the Duffy family to set up a forecourt store as there were no forecourt stores on one side of the town, so Tom Duffy approached us and developed the store in partnership with us,” he says. “We are very happy with how the shop has been finished; it has been completed to a very high standard and it incorporates all of our sub-brands, including Freezi Licks ice cream, Market Street Deli, and Urban Sips coffee. The store features an extremely high roof, which makes it one of our most impactful stores, and all of the elements have come together really well. It is great to be adding on high quality stores to our estate. We are always trying to improve the standards in our stores and the profile of Costcutter. We have been adjusting our interiors recently and we are delighted with the feedback that we are getting from the owners and from the customers. Also, from a trading point of view, we are very happy with Costcutter Castlebar.”
Coping with Covid
Central to the success of the Barry Group’s operations during the height of the Covid-19 pandemic was its ability to mitigate risk at its warehouse in Mallow, Co Cork. “It was a very difficult time and it was something that the trade hadn’t expected and had no experience of dealing with, but we did a very good job of adapting to what needed to be done,” he says. “We had to make sure that we kept our warehouse in Mallow operational because if there was a Covid outbreak in the building we might have been shut down, so we divided our operational team into two separate units – one worked from 5am to 2pm and the other from 2pm to 10pm, so that reduced the number of people in the warehouse and therefore the chances of an outbreak. It was critical that we were able to get orders to our retailers as they were a lot busier than normal. Initially, we thought our business would take a hit, but we were actually quite busy. A lot of retailers found it hard to get stock, so we were able to respond to that, and not only supply our existing retailers with stock but other retailers who weren’t our regular customers. I took on a crisis management role and a very hands-on approach. Our team really stepped up – they fought hard to get stock that was in short supply and to ensure that our retailers’ shelves were stocked.”
We know that sales in the off-trade sector really took off during the pandemic, and while sales have stabilised, drinks sales in the off-trade are still one of the strongest performing grocery retail categories. According to Barry, the Carry Out franchise delivered “a stunning performance” during the pandemic. “The retailers worked very hard to cope with the unprecedented levels of demand for alcohol,” he says. “In a lot of cases, their business was up by 100%. The brand is doing well, and we are very happy with its progress. We have a lot of enquiries for new Carry Outs, so we are very excited about the growth opportunity in the Carry Out business for the coming year.”
Costcutter has a house brand, Meadowbrook Farm, for chilled and fresh produce, but they are currently working on a broader own label range. “I can’t talk about it yet, but we will be making a very positive announcement on an ambient own label range shortly,” he says. “I’m hoping to announce it before the end of the year. The plan is to have one brand for fresh and chilled and one for ambient. Meadowbrook would be the fresh and chilled private label brand and that brand will be expanded with some new local Irish products.”
Regarding the lasting impact of Covid-19, Barry says that businesses will need to ensure that they have a reserve and a balance sheet, as well as a strong, resilient and adaptable team. “We are lucky because our retailers have willing and flexible workforces, but it is now a different shopping experience,” he says. “Consumer demand for hygiene and cleanliness was always there, but now, if the standards aren’t what they need to be, customers just won’t go into a shop. I think that quality retailing will be really important going forward and retailers will have to adapt at a quicker pace than before, and keep adapting, to stay viable in this new normal.”