Friday 9 December 2016

Front-of-store reader planning on writing a new chapter at Eason

Chief wants store to become more devoted to core areas

Published 19/08/2010 | 05:00

In a large distribution centre not far from the end of Dublin Airport's runway, a €7m piece of German-made robotic kit is busy flying up and down a narrow aisle on what look like mini train tracks, sorting deliveries for Eason stores around the country.

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It's a busy time for the bookseller and stationer. The new school year is just around the corner and business is brisk. A crew of 70 dots the warehouse floor, part of the 120 or so staff cohort that occupies what is the administrative headquarters for the retailer that will have been on the go for 125 years in 2011.

As managing director Conor Whelan leads the brief tour of the facility, he notes that there are about one million books currently on site. At any one time there could be 1.5 million items in the warehouse, from christening candles to cuddly toys.

Challenge

But for Whelan, an accountant who was previously managing director of BWG's Spar and Mace business in Ireland -- and then of the upstart 'Fresh' supermarket chain backed by developer Paddy Kelly's son Simon which stalled on the starting blocks -- selling those books to customers is a tougher prospect than ever. He's unfazed by the challenge being wrought by the recession and international sellers such as Amazon.

Just a year into the job, Whelan has been touring stores in the UK for ideas. He's also mulling a trip with management to the United States to do the same, while research group Amarach has just prepared the results of a major customer survey.

He won't divulge the findings, but concedes that significant changes are likely to be made at Eason stores to ensure it doesn't become an irrelevance on the high street.

"This is a six to 12-month strategy process. Next year will see the first iterations of that new retail strategy. How quickly that will roll out across the estate will depend on overall group performance and the investment required," he says.

Speaking at his office, where black-and-white photos of Eason from days of old adorn the wall, Whelan is charged with the task of steering the retailer back to terra firma. With 28 company-owned stores in the Republic of Ireland as well as 16 franchises and seven airport concessions it acquired after Hughes & Hughes went into receivership, and a further 14 outlets in Northern Ireland, the task isn't an easy one. In the last financial year, for the 12 months to the end of January 2010, like-for-like sales at Eason outlets in the Republic slipped 5pc, while group turnover, which includes its wholesaling joint venture with Scottish firm Menzies and an electronics payments business in South Africa, was down 16.4pc to €313.6m. Operating profit from continuing operations excluding joint ventures was €1.65m compared to a loss of €18.3m a year earlier.

The revenue decline included €29.1m that was related to Eason's disastrous and now offloaded foray into Britain. It acquired a majority stake in British Bookshops and Stationers (BBS) in 2003 before buying it outright in 2005. Eason has retained the freehold on 14 of the BBS outlets. Excluding discontinued operations and its joint venture, sales were down 8.8pc and Eason's gross margin climbed one percentage point to 23.4pc. The figures the previous financial year had been hit by a €22m property impairment.

"For shareholders, the light at the end of the tunnel is if we've hit the bottom in terms of the declining property market and if we're at the bottom of the trading cycle and then moving forward we're pointing to the core business being profitable and sustainable," he adds.

But all signposts are pointing to a business that, aside from unavoidable impact of recessionary effects, is in need of a tonic.

Whelan admits that the large array of magazine titles it carries, some of them fairly obscure, will be culled, while he wants to revamp the in-store product categories.

"The biggest part of the business is the retail business in the Republic. It's profitable, but there are major challenges," he explains. "You can't deny the trends of online purchasing and ebook sales, but we have plenty of opportunity to improve our product offering and make our stores more attractive to consumers to ensure viability."

He says that Eason will revamp its online offering but that it will never, and can never, be an online rival to Amazon. He also wants to embrace ebook sales "in store".

"We tend to focus quite heavily on new titles in our book sales, and on the mass market. I'd like to see us develop more of a specialism around key categories."

Kids books, travel, mind and soul, adult and Irish authors are all the types of categories he's thinking of.

"We need to be less of a generalist and create more of a unique selling point around particular categories. Is that enough? Done the right way, and given the leading market position we hold, I think yes, it is."

The average transaction value in an Eason store is less than €10 -- in line with peers such as UK firm WH Smith, while a whopping 70pc of Eason's retail customers are female.

It draws most of its customers from the 25-45 age group, while 50pc of turnover is generated from books, 20pc from stationery and 10-12pc from newspapers and magazines. The remainder comes from items such as cards and gifts, tobacco and soft drinks.

Getting people -- including men -- to stay longer inside stores, and probably reducing the reliance on discount offers is likely to be a key focus in any revamp, along with "bluesky" elements, says Whelan. He doesn't spell it out, but it's also likely that aspects of rivals' new strategies could also be included, such as making outlets more relevant in terms of content and activity to their local community.

Meanwhile, Whelan, who is the first ever managing director from outside the business to be appointed at Eason, also has a shareholder base of 325 that he has to keep on side. Over 50pc of the company is controlled by five families, all with historic links to the retailer, while staff, past and present, own much of the remainder. They shared a €2.6m dividend in 2009, but will get nothing this year -- one of only perhaps two times in Eason history that a dividend hasn't been paid.

Whelan insists the loyalty of the shareholder base is unwavering and that he has full latitude to do what he thinks needs to be done at the company.

"My firm belief is that vast majority of shareholders have a very close and strong affinity with the business and the brand," he stresses, when asked how any potential takeover approach in the future might be received by shareholders.

But wary of the threats posed to Eason, Whelan is also about to make a number of board appointments, including a new chairman who'll replace John Cudlipp. Whelan won't even hint at who he has lined up, but it's likely that his new appointees will include retail veterans that will bring significant fresh input to the board.

Despite the somewhat incomprehensible foray into Britain in the last decade, at a time when the home market should probably have been the key focus, Whelan is adamant that further expansion of the Eason footprint isn't off the agenda.

The company has also been rolling out a chain called First Chapter, with stores being targeted towards smaller rural towns. Many of them are operated by SuperValu franchisees, according to Whelan.

A fan of thrillers such as Robert Harris' 'Pompei' and 'Imperium', which he has just started, Whelan laughs that he's a 'front-of-shop' reader.

While the full impact of his plans won't really be known for about another two years, the writing for change is already on the wall.

Irish Independent

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