For the oldest companies, it’s easiest to stick to the tried and tested – but long-established brands find maintaining a close relationship with customers and responding with new products is key to longevity
LONG-ESTABLISHED firms may have the advantage of experience, but keeping their businesses both vibrant and profitable is no easier for them than it is for new kids on the block. For those involved in traditional industries, the challenges can be even bigger as technology, low-cost competition and the globalisation of markets has fundamentally changed their commercial environment.
The secret to long-term success for many of Ireland’s oldest companies has been staying with what they know, but tweaking – and often retweaking – their products to suit changing circumstances. They have become more strategically focused, aligning day-to-day operations with clear business objectives while also changing processes to optimise customer service and reap the productivity benefits of more efficient technology.
“There is always room for the ‘eureka’ moment and those who come up with a bright new idea should be given the oxygen to fully explore it. But success is generally down to the daily grind of making sure that the critical things that make your business tick are happening as well as they should all of the time,” says business consultant and Enterprise Ireland mentor Gerry Quinn.
Quinn’s no stranger to longevity in business. His family’s hardware and building supplies business in Edgeworthstown, Co Longford, was established in 1875 and is still thriving, while he spent 30 years with the Irish distributor for Stanley tools, PE O’Brien. Quinn says mindset plays a big part in whether a company will be around in 50 years’ time.
“You have to decide if you’re there for the long haul or just to reach a certain point and sell,” he says. “If selling is the objective, this impatience will permeate the business. For the longer term my advice is stay close to your customers, stick with core competencies and think twice before taking risks with products and markets you don’t know.
“Having a strong relationship with your customers is critical but it’s surprising how many companies are bad at it. It involves getting out there and listening while also using the opportunity to tell customers about new products or investments and how this will benefit them.”
Quinn’s view about keeping customers close is shared by Vincent Carton, managing director of Carton Brothers (Manor Farm chicken) which has been in business since 1775. “My brother Justin and myself are the eighth generation to run the business and, looking back, each generation reinvented the company to some extent,” he says.
“In our case, the watershed was 2003. We were facing financial difficulties and brought in an external shareholder to inject the equity required to rebuild our processing plant and take around €4 million out of our cost base.” Investing in a plant also allowed the company to scale up to cope with the huge volumes involved in supplying “own-brand” products to the multiples. The company now processes around 800,000 chickens a week, employs 685 people and had sales of €180 million in 2010.
Carton Brothers sticks close to its customers on two fronts. It constantly develops new products to drive sales for retailers. Last year, for example, it launched an astounding 122 product variations, none of which stayed on the market longer than three months. The idea is to whet people’s appetites and encourage them to try their own versions at home, boosting sales of both full birds and fillets.
At the logistics level, Carton Brothers has scored points by reducing the amount of time its customers spend handling its products. “In most cases, food companies supply product to the distribution centres on pallets which have to be split up and assigned to different stores. We build their order by store from the outset so our pallets go straight to their out bays. This was a small thing for us to do at plant level but it has integrated us even more closely with our customers,” Carton says.
One sector that has seen an unprecedented change in its traditional sales model is the music industry. This has prompted even traditional bands such as Dervish, which has been around for 21 years, to recognise that today’s consumers demand far more interactivity. The band has just launched an iPad app (created in partnership with the Serious Games and Virtual Worlds team at the University of Ulster) to keep itself in tune with music buyers.
“As a band we have always tried to innovate while staying true to tradition and our roots,” says lead singer Cathy Jordan. “Part of this process is embracing the opportunities presented by new technologies. The interactivity offered by a platform like the iPad allows us to present our music in new and engaging ways and to reach new audiences worldwide.”
Case study:
Adapting to stay competitive
In a cut-throat market, an Irish textiles business puts its resilience down to prioritising product quality and speed over low cost – as well as the all-important ‘keeping up with the times’
LITTLE NOW remains of Ireland’s once diverse clothing and textiles industries. One of the few exceptions is Cavan-based producer of upholstery and curtain fabrics, Tabetex, which has been in business for more than 50 years.
The company was set up in the 1960s by Italian-born Luciano Vergnano who was attracted to Ireland by the then Industrial Development Authority. Today, his sons Richard and Mark run the company, which employs 21 people in Shercock supplying furniture manufacturers, mainly in the UK and Ireland.
So, how does a small company such as Tabetex avoid succumbing to lower-cost producers? “There is no single answer,” says Richard Vergnano. “We havent done any one thing that’s been exceptional but we have moved with the times, whether that means embracing new technology or becoming very pro-active in design because tastes change so fast now. On a cost-per-metre basis we are not the cheapest but when you take a combination of other factors into account, such as shorter lead times, product quality, strong design capability and the fact that we’re on our customers’ doorsteps. That means they do not have to hold large amounts of our stock as we do short runs and ship within 24 hours.”
Vergnano says that probably the most important thing the company did to safeguard its survival was to replace its ageing plant with high-tech equipment in the 1990s.
Up to then, new designs were hand done and took weeks to complete. With the assistance of CAD this was reduced to hours and it became possible to create more sophisticated designs.
“I’d put our resilience down to three things,” Vergnano says. “We’re right up there in terms of design. We can complete an order in half the time it would take our competitors and quality is consistent so our customers don’t have issues with colour fade, for example.
Vergnano says the company has cut costs to a minimum and is “treading water” in the current climate. It remains open to new opportunities and has worked with Enterprise Ireland to find them. With the agency’s help, it landed a contract with US home-shopping channel QVC for Celtic-patterned throws for St Patrick’s Day.
Changing consumer tastes can have a huge impact on a traditional business, as Tabetex discovered a few years ago when minimalist interiors became the rage. Leather sofas were an integral part of that look and the market for fabric sofas collapsed.
“Fabric sofas traditionally accounted for around 90 per cent of the market and this went to 70 per cent in favour of leather,” Vergnano says. “Happily, it’s changing back again now and is more like 50:50 as people are bringing colour back into their homes.”
In a cut-throat market, an Irish textiles business puts its resilience down to prioritising product quality and speed over low cost – as well as the all-important ‘keeping up with the times’
How to stay in business for the long haul
* Keep close to your customers – remember, they like to meet business owners
* Actively communicate changes within your business
* Monitor market trends and respond
* Invest in new equipment to improve efficiency
* Get the most from existing products and base new ones around core competencies
* Be thorough in researching and testing new products or markets
* Always deliver on time, on price and on quality
* Support the development of new ideas
* Tap into the knowledge of organisations such as Enterprise Ireland to identify export opportunities
