Sunday 25 September 2016

Carraig Donn: Success after sibling rivalry as growth follows recession

It’s hard surviving in retail during the recession – even harder when two brothers didn’t see eye to eye. But Carraig Donn has thrived through adversity, says Ailish O’Hora

Published 18/06/2015 | 02:30

Pat Hughes md Carraig Donn
Pat Hughes md Carraig Donn

It was 2012 and the country was in the throes of recession. But businessmen and brothers Pat and Hughes, joint owners of fashion, giftware and jewellery firm Carraig Donn, weren't just fighting to keep their business above water, they were fighting each other over the running of their firm.

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The case ended up in the High Court where the two Mayo men were told by Justice Peter Kelly to put their differences aside for the sake of the business and the-then 350 staff working for them.

And that's just what they did. They had to, according to Pat Hughes, managing director of Carraig Donn.

Three years later, and a whole lot of business in between, the company is in expansion mode and is looking to open up stores outside the Republic for the first time with executives looking at two cities in the British midlands as the first foray abroad.

 There has also been management restructuring - there are now four non-executive directors at Carraig Donn.

And the company, a family business for the past 50 years, has also just taken on new staff, bringing employment levels to 450.

But the past few years weren't easy for the business as the recession took hold, Pat Hughes conceded.

"This recession was a total nightmare," he said, speaking from his modest office at Carraig Donn's headquarters just outside Westport.

"We had wage cuts from 5pc up to 15pc. Myself and my brother Vincent took wage cuts, we took €1m out of the company in overheads, we talked to landlords, to everyone really."

The company also began to expand, to spread its cost base in a bid to take pressure off the business.

And the brothers also had to put their differences aside, forget the past and focus on the bigger picture - Carraig Donn.

"I don't look in the rear mirror. The company is run by senior managers - in all businesses you'll have differences of opinion. Rivalry can be healthy too. We are professional people."

Today there are 35 Carraig Donn stores and the firm has an annual turnover of over €35m. And a family business theme runs strongly in what the brothers have achieved, despite the sibling rivalry and the recession. Their mother Maire was the founder of Carraig Donn. The business was established in the 1960s and developed into a home craft industry with the first order coming from Galway businesswoman Mary Bennett. However, she passed away soon after the business was up and running and Pat joined in 1971.

"Her passing left a massive void, I was left running the company at a very young age." Pat said he had plans for the bright lights of Galway and UCG where he was expecting to do a commerce degree.

His father, though, had other plans.

"My father came out to the Aran Islands where we had a shop and I was working there for a summer.

"He said very clearly - 'I'll teach you more in three months than they'll teach you there Pat'.

"And that was the way it was, there was no arguing. He was fantastic and he taught me everything about business."

He added that one of the best lessons to make in business is that there is no shame in failing.

"We made many mistakes and you learn from them. We have always been flexible to change and that's why we're here today.

"Branded retailers have become unstuck on price and freshness. So Carraig Donn, with our own brands, is more in control of our price points and good design. We moved away from being a retailer controlled by manufacturers."

And even back in the 1970s, using the best technology available in the manufacturing business was key. "We found the best machines being used to make jumpers and got them in. They were 100pc computerised and worked on a shift basis - 24/7. "When the industry moved offshore in the 1980s, we survived - because we operated on a shift basis. We are now expanding again and we will continue to keep our cost base down."

Those of us old enough to remember when Crios belts were cool have contributed to the Carraig Donn story, it seems.

"When we moved out of wholesaling into manufacturing, we kept running out of Crios belts.

"I spent time in Sunderland learning how to weave. Our first customer was Margaret Heffernan (Dunnes Stores) and we were also selling to Manchester United.

Today, those woollen machines, although newer, are still working 24/7 and the company is competing with the likes of Guernsey Knitwear as well as manufacturers in Poland and Romania and West End knitwear at home.

The US and Europe are the main markets for the manufacturing business with Europe, the UK and Japan becoming more important over the next three years.

According to Hughes, the manufacturing business is now 65pc export while the internet business is the retail focus.

"We began our online focus just three years ago when we were in a major downturn. For our retail business it became another window and it has been very beneficial."

The company now employs a full-time photographer as well as online marketers although sales are still in single digits.

"However, they grew by 50pc in the first year - two out of five customers see our products online."

"Retail in Ireland, and elsewhere, has totally changed. And the internet is a fantastic marketing tool for both home and export markets."

He added that many retailers were caught off guard with the introduction of Black Friday, for example, which is essentially bringing the Christmas retail market back by a week. And Carraig Donn has to constantly reinvent itself as both a manufacturer and a retailer, he added.

For example, the company uses what it calls the Zara model when it comes to its fashion range.

"The turnaround of fashion is every four to six weeks, we have a line of manufacturers working for us in Europe; France, Italy and Spain, who can stock our shops in fashion every four to six weeks, similar to the Zara model."

Its own brands include lines like Delphi Living, Amor Vitae and J'aime la Vie.

New developments aside, Hughes is quick to highlight that in a family business the old-fashioned values of hard graft, back bone and vision still have a place.

"Growing up in the business, you'd work during the day picking up sales skills and crafts, and at night time my father taught me the accounts, how the P&L worked.

"My uncle Charles Hughes had a bad debt one year that wiped out all the good work done by everyone but they had backbone and they kept going at Westport Clothing (now the international brand Portwest)."

Having bought out Carraig Donn family members in the 1970s, Pat runs the retail/marketing end of the business while Vincent runs the plant as well as the manufacturing and export operations.

"I'm 44 years in business, 43 as managing director," he said. "Not many people have had that opportunity. In the next five years we plan to double our manufacturing business and that is totally export driven.

"In our retail business, we have our own niche with the Zara model and a customer base that keeps coming back. Irish women are very comfortable with good design."

Although Hughes says that business is still tough and credit is hard to get. The company is also still suffering from the curse of upward-only rent reviews, he said.

However, following on from the recession many of the international retailers that piled into Irish shopping centres are now gone and that development has brought opportunities for Carraig Donn.

And he is positive about Carraig Donn's future and remains forward looking.

As Carraig Donn celebrates 50 years in business this year, still no regrets. Not even the bright lights of Galway city?

"I would like to have gone," he said with a wry smile. "But we employ a lot of those graduates now."

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