As the economy rounds the bend into the new year, there is an unmistakable pall of gloom over much of the retail sector, due to the perceived threat to traditional retailers from online shopping.
In between the clouds, however, there are still flashes of sunlight. Middle-of-the-road, ubiquitous retailers may be under pressure in many areas. But certain segments of the market are emerging as hotspots for traditional bricks-and-mortar retailing. For example, fast-but-healthy food offerings and foreign franchises with unique offerings are thriving on Irish shopping streets.
The industry lobby group, Retail Excellence, recently established a formal network of town centre retailers that are in growth mode.
“The truth is that bad retail is dying, [but] brilliant retail is alive and well,” says David Fitzsimons, chief executive of the lobby group.
In November, Retail Excellence assembled its network for an inaugural seminar in Dublin. Meet some of the fastest-growing bricks-and-mortar retailers in the State.
Vincent Lynch, Hale Vaping
Smokers are (literally) a dying breed, but vapers are on the rise. Locally-owned Hale Vaping has about 50 retail stores. It operates about 70 per cent of its own network, with the rest franchised.
Co-founder Vincent Lynch says the group hopes to open another 20 sites over the next three years.
“We opened 12 new stores in Ireland in 2018, such as Phibsboro in recent weeks and also Athy in Kildare, Clonmel in Tipperary, Parnell Street in Dublin, and South King Street,” he says.
Despite its focus on expanding its physical store network, Lynch insists the company is not a tech Luddite.
“We do have an online presence. But the nature of the product suits our physical store network. Most of our customers are ex-smokers who come into the stores looking for advice and product expertise.”
In addition to its own stores, Hale has its own manufacturing facility and distributes its products to about 1,800 convenience retailers, such as SuperValu, Centra, BWG and Applegreen.
“A lot of competition in the convenience space comes from the brands of the big tobacco players,” says Lynch.
He believes the initial “gold rush” of new vape stores in recent years is reaching “a natural conclusion”.
“Everywhere has a vape store now. But we are asking landlords, who might already have a vape store in their shopping centre, to widen the range by allowing Hale in too.”
Hale is also active abroad. It has three franchised stores in London, with another franchise due to open in Munich in March.
Mike Burke, Flying Tiger Copenhagen
Scandinavian retailers are in vogue in Ireland, but few have expanded as quickly here as Danish group Tiger, which recently rebranded globally to Flying Tiger Copenhagen.
The knick-knacks group, which entered the market six years ago, last month opened its 26th Irish outlet, in Wexford. It has 980 stores globally.
“In Ireland, we will stretch to 35 stores within about two years,” said Mike Burke, Tiger’s local managing director. “We might also dispose of two or three.”
Burke says Tiger is seeking “robust, lengthy contracts” from Irish landlords.
“We want reasonable rents in return. But some landlords and property owners want both sides of that equation.”
The company is particularly looking for sites in busy south Dublin locations, as well as possibly near Navan in Meath, and Waterford or Kilkenny.
“We are looking for approximately €100,000 annual rents, within 100 metres of the best footfall areas. Our typical store size is 200sq m. That gives us enough space for our signature maze layout.”
Tiger currently does not sell its products online.
“About 70 per cent of what we sell is for €3 or less. It’s hard to do that online and make money,” says Burke.
“We are an experience store. It’s about treasure hunting in the maze. You end up buying something that you never knew existed. It’s a tactile business. You need to be able to pick the products up and smile at them.”
He says a group-wide initiative means it may sell higher value items online, sometime over the next 12 months.
Burke doesn’t think the narrative regarding the threat from online is overdone.
“I do believe that people are moving away from the high street. But when I step out on to Henry Street most days, it is still crazy. Customers are attracted to certain hubs. They will still swamp those.”
Heather and Niall Lawlor, Sostrene Grene
Another Danish immigrant, chic furnishings and design group Sostrene recently opened its sixth outlet in a premises that formerly housed Waltons music store on South Great George’s Street in Dublin.
“It is certainly performing to expectations,” said Niall Lawlor, who along with his wife Heather, operates Sostrene in Ireland as a 50/50 partnership with the Danish parent group.
“We are quite happy with our locations. We are not looking for main street, prime locations.We look for off-pitch sites that might appeal to a value-conscious customer. There is a real Scandi feel to our stores. Once a customer discovers it, they always come back.”
Lawlor says a suitable target for the Irish market would be about 10 stores.
“I am confident we can get to that. After 10, we will assess it. We don’t want it to be everywhere.”
Like its compatriot, Tiger, Sostrene Grene doesn’t sell online. “We want people to come in to touch, feel and experience our products. That’s very important to us. It is very hard to make online experience tangible or tactile. The trick is to make sure people online have enough information to understand what you’re all about.”
Lawlor says the big issue for many retailers isn’t adapting to e-commerce, but rather negotiating acceptable rents.
For future expansion, the chain may look towards Galway, the southwest and also the southeast of the State. It is also looking for another location on Dublin city’s northside.
Keith Rogers, Ecco Shoes
Yet another Danish chain in Ireland, the local Ecco operation run by Keith Rogers owns and operates 18 footwear stores. It had 11 stores here in 2010. Through various retail partnerships, it also distributes Ecco shoes to about 250 other retailers.
Last year, new openings included Bray, where it opened in the town centre in October, and the Kildare Village outlet centre. It also operates a concession model, where it rents floorspace from other retailers, such as Shaw & Sons.
“The deal with Shaws is working well. It allows us to go into towns that might not have been big enough for us on a standalone basis. We will open in this way in Dooradoyle and in Waterford city this year,” says Rogers.
The online store is operated by the parent group, although Rogers still collects a small fee for every sale into Ireland. He believes the threat to traditional retailers from online is “grossly exaggerated”.
“There are returns of 45 per cent on online footwear sales. Shoe customers are fickle,” he says. “You have to try them on. It costs the group €26 to deliver a pair of shoes to a customer, plus another €8 to reprocess the shoes if they are sent back.”
All 18 Ecco outlets in Ireland have been upgraded to its latest store concept in last five years.
“It is no longer acceptable to just put something on a shelf and expect people to buy it. Customers need service, they need a store experience, and there must be a visual element.
Rogers laments the “continued demands” of landlords . . . [who] always expect double-digit rental growth”.
“We have learned that we don’t need to be on Grafton Street every time we open. We can take less profits from a smaller turnover, but still make enough money to justify it. There is a new reality for retailers but we will be resilient.”
Stuart Fitzgerald, Leon Ireland
The healthy, over-the-counter food segment is among the hottest parts of the retail sector currently. UK brand Leon, which describes itself as a purveyor of “naturally fast food”, is gearing up for its Irish launch in 2019.
“The brand will hit the streets during Q1 (the first quarter of the year) in Dublin city centre, while in Q4 we will also open in Dundrum. We plan 20 Irish outlets over next five years.
“We are very bullish about the Irish market and the gap that exists,” said Stuart Fitzgerald, a Waterford accountant who, along with his business partners, is bringing the brand here under licence.
Leon has engaged Savills to find it site opportunities.
“It is not the easiest property market. We are looking for 1,200-1,800sq ft ground-floor units, with high footfall. We want to be near office workers, students and shoppers, and it has to be a six or a seven-day day site.”
Most of its Irish outlets will be in Dublin, but the group is also eyeing Belfast, Cork, Galway and Limerick.
While the focus is on the rollout of its physical network, Fitzgerald says the brand can’t afford to ignore online. It is looking at partnerships with some of the major online food delivery sites, such as Deliveroo, UberEats or Just Eat.
“The online aggregators are the biggest in this space. They are impossible to ignore. We will hook up with at least one of them. It is an essential part of the business model now.”
Dave O’Donoghue, Freshii Ireland
Dave O’Donoghue and his business partners brought the Canadian healthy fast-food brand to Ireland in 2015. Since then, they have opened 13 mostly franchised outlets, with a plan to have “somewhere north of 30”.
“We have a couple of interesting partnerships in the pipeline,” O’Donoghue says. “Standalones are most difficult to open.
“When we opened first, you could look at 12 or 15 stores and take your pick. Now there is a shortage of locations. Our next phase will be to open second or third locations with existing franchise partners. We won’t have 30 partners when the network is rolled out.”
O’Donoghue fears that if you put a brand “everywhere, it becomes ubiquitous and stops being special”, so he is trying to be choosy on locations.
“I’m originally from Killarney, so you’d look there. But the market in Killarney is not developed enough for Freshii. We need to find areas where there is a big density of millennials who are working, and who have disposable income.”
Freshii started online with Deliveroo two years, while it recently also joined Just Eat. O’Donoghue says it will also launch its own click and collect app in 2019.
“Some might be in non-traditional locations. We are getting a lot of enquiries
from contract caterers for offices and universities, etc.”
John Nevin, Pita Pit
Another Canadian healthy eating franchise, Pita Pit opened its first outlet in Dublin’s docklands in October, with its second, in Blanchardstown, opening just before Christmas.
It plans to open four new outlets in 2019 , including three sub-franchises.
“The plan is to open 50 by 2022,” says John Nevin, a director of the consortium that has bought the master franchise for Ireland.
“It’s a small brand. I found it in New Zealand. I grew up in retail and I also worked in a McDonald’s when I was younger. I had been looking to do something for myself since 2003. The timing was right. I’m 55,” he says.
Nevin says he and his partners spent many months trying to find the location for their first Dublin store “but good sites are like the 46A bus. You wait ages for one, and then a few come along at the same time”.
“We will probably do five outlets ourselves, while the rest will be franchised to others.”
Online, Pita Pit is signed up with Just Eat, Uber Eats and the food click-and-collect app, Bamboo.
“It doesn’t matter how focused you are on your physical store network, you simply have to be online too. But it costs. We give Deliveroo 30 per cent of a sale, Just Eat 14 per cent, and Bamboo 7 per cent.”
Yvonne and Derek Kelly, Nourish
Derek Kelly and his wife Yvonne have been in business as a health food and supplements retailer since the 1980s. The group has about seven standalone locations around the greater Dublin area.
In 2017, however, Nourish signed a partnership with Dunnes Stores, as part of the department store chain’s repositioning of itself as an Irish food business. Since then, it has opened four stores inside Dunnes outlets, including three in Dublin – Cornelscourt, Donaghmede and Blanchardstown – and one in Cork.
“The purpose of the Dunnes deal was to open in areas with high footfall and to give us the sort of mainstream exposure we couldn’t otherwise get,” says Nevin.
Health foods, Nevin says, have reached “a mainstream tipping point”.
“It appeals to everybody.The priority for us right now is the partnership with Dunnes. But we are still prepared to do standalone outlets if the right opportunities arise.”
To survive as a retailer in the online age, Kelly says, “you need individual strengths and you need to actively manage your stores”.
“Your offering has to look good, but it also has to be timely. Doughnuts, for example, were just a retailing fad.
“You need to be completely up to speed. People also need to be attracted to your stores. The ones that do well are the ones that look fantastic.”
