XL goes from small to supersized in cut-price shopping
Published 17/06/2010 | 05:00
RETAIL chain XL is nothing if not pragmatic. For more than a decade, it has positioned itself as the saviour of Ireland's rural corner shops, allowing those most traditional of businesses to be part of something bigger and safer, without sacrificing their independence.
Yet more recently, as Tesco was being lambasted the length and breadth of the country for replacing Irish stock with cheaper UK imports, our home-grown local business enthusiast XL was doing the exact same thing.
And what's more, John Moane, wholesale manager at XL's owner BWG, is unapologetic saying that of course it would prefer to support local businesses "but not if it means they aren't competitive".
"Our retailer is in the same town as a Tesco, as a Dunnes, as another strong convenience brand -- their primary demand to us is that we deliver value to them," he added.
That quest for value saw XL import "confectionery, chocolate, household grocery products, soft drinks and anything that could profitably be brought in" over 2008 and 2009 as sterling swooped to record lows against the euro.
Shoppers were kept onside because XL was "very careful" to make sure that the products brought in were "very similarly branded" to the Irish versions, Moane added.
It might not go down well with Irish suppliers, but pragmatism is clearly paying dividends for the XL chain, which shares its BWG stable with bigger brands Spar and Mace.
In early 2008, before the recession hit, XL boasted a network of fewer than 110 stores. By the dawn of 2010, the number had hit 140. Moane is hoping to be up to about 160 by the end of this year, with 200 on the books by the end of 2011.
"We've been operating in a very difficult market for the last three years so to have any growth at all is really great," he said. The rapid growth has been aided by XL's natural advantages in a recession.
Born in 1999 to hoover up the shops who wanted more independence than they'd get with the likes of a Centra or a Spar, XL has always had a proud rural bias. "Because a lot of them are rural, our retailers wouldn't have invested a huge amount in expensive new properties," says Moane, adding that many retail failures in the wider environment are actually triggered by property plays gone wrong.
Moane also believes his retailers are somewhat insulated from the evaporation of Breakfast Roll Man.
"Large population areas have been hit very hard by the building trade pulling out but that hasn't hurt our rural retailers as much," he said.
As well as being blessed with a retailer base that was somewhat cushioned from the worse recessionary impact, the downturn has also proved something of a recruitment tool for XL. "The economic situation has put significant pressure on independent store owners," says Moane, acknowledging that the difficult climate has made retailers keenly aware of the numerous benefits of being part of something bigger. Shops coming in under the XL banner get cheaper wholesale prices, but still have the freedom to buy some goods from their local suppliers.
They can also drive down their costs by availing of BWG's group schemes for services like energy and they get to hang a known brand over their door.
"You need a brand name. It helps give you a standing amongst other shops," said Con Moloney, who owns the massive XL outlet at the end of the old M7 road in Mountrath, Co Laois.
Moloney is also a big fan of the support he gets from XL, praising the team for working night and day to help him lay out his store in XL format, and he likes being able to sell their 'own brand' Family Value range.
"We're trying to increase our private label range," continued Moane. It's very clear that the consumer appetite for an alternative to the main brand is completely different from what it was four or five years ago. Now it's all about value."
In 2008, XL lost about 15 stores, double the usual rate of attrition, as the recession bit.
The chain responded by summoning a group of its more "progressive" retailers and asking them "what they wanted".
A consumer focus group was also convened, to give a broader picture of how XL was perceived in its communities.
"Everyone felt that the image needed brightening up and an uplift," Moane recalled.
"The colours weren't bright enough and the names were too convoluted, we went under the 'XL Stop and Shop' banner and we encouraged them to use their own names as well so you'd have 'John Moane's XL Stop and Shop', which was a bit of a mouthful."
BWG duly responded by changing the chain's name to the simpler 'XL', and introducing a new green and blue colour scheme. The review led to some more fundamental changes as well.
Over the boom, many of XL's traditional corner shops had followed their larger peers down the fresh-food route, offering everything from paninis to smoothies.
"It became clear that we needed to bring the focus back to core categories like minerals, confectioneries, household products and not get too carried away with fresh food offerings that some stores really weren't suitable for," said Moane.
Retailers were also keen for BWG to make the XL brand "more accessible from a cost point of view".
"In the boom, a typical shop could cost €40,000 to €50,000 to fit out, you could add to that significantly, depending on what you did," said Moane.
Turning old stores from 'XL Stop and Shops' to 'XL' stores will only cost €10,000, and there's no onus on stores to make the big switch. "Our job is to convince them that it will be money well spent. They won't do it unless they can justify it," said Moane.
Moloney's XL is already sporting the new look and its owner sees a bright future.
This is despite new roads to ease traffic congestion in Mountrath and its neighbouring village Abbeyleix taking potential customers away.
"We're going to lose a certain amount of business, but there'll be tolls and people have to stop somewhere," he says.
Having doubled the size of his store over the past three years, Moloney is planning to add a garden centre next year to "make it worth people's while" to detour to his supersized XL.
There's space in there for XL's local roots, too -- Moloney recently added homemade breads and jams to give his store an extra something.