SPAR boss: ‘Our strategy is whatever money you make, pump it back into the business... and it’s paying dividends’
Paddy Doody of SPAR owner Henderson Group tells Margaret Canning about its reinvestment strategy and why he’ll never regret spending 18 months in Australia
The activities of Henderson Group touch on all our lives here in Northern Ireland. The company has owned the Spar franchise, which originated in Holland, since 1960 and the symbol retailer has long been our biggest convenience store operator.
Paddy Doody, the company’s sales and marketing director, is the public face of the fourth-generation family-run company.
Geoffrey and Martin Agnew are the great-grandsons of the founder John Henderson, who started the business as a bread and milk wholesaler in St George’s Market in 1897. Geoffrey and Martin, however, shun the limelight — instead gently pushing Paddy, who’s worked for the company for 11 years, towards the sun. He said: “If an interview opportunity comes up, they’ll say to me: ‘Paddy, that’s your job’.”
There are 322 Spar stores in Northern Ireland —280 in the Spar convenience store format and 44 in the larger Eurospar supermarket guise.
Out of that portfolio, the Henderson Group fully owns 76 stores, of which 60 are Spar and 16 Eurospar.
All Spar shop owners are in a supply agreement with Henderson. In addition, there are 77 Vivo/Vivo Essentials stores — another retail franchise in the Henderson family.
In its last accounts for the year ending December 31, parent company John Henderson (Holdings) Ltd had pre-tax profit of £21.2m, up 16% from £18.2m, and turnover of £663m, up 3% from £642.8m.
There are four companies in the family — a wholesale company, a retail firm, a foodservice business and a property company.
Mr Doody, who is from Omagh and worked in drinks firm C&C for 16 years before joining Hendersons, said the company’s success is down to reinvestment in the business.
He said: “The executive summary in our latest results says it all about the reinvestment in our business in the last number of years.
“Our strategic report reveals that our level of capital expenditure in 2014 was £24.1m — reinvested back in the business for things like acquisitions, refurbishment loans to retailers and improving our own infrastructure.
“Our head office in Mallusk is now derelict becauase we are stripping it down to the bare bones and then doubling its size for current and future growth.
“Our strategy is that whatever money you make, you pump it back into the business. Look at 2014’s performance — with profit after-tax of £16.2m, operating profit of £21.1m — we had a capital expenditure spend of £24.1m.
“So you are investing more money than you are making and that’s a deliberate strategy for the last number of years and it’s paying dividends.”
Paddy is eager to demonstrate how Spar dominates our lives — while also showing off an enyclopaedic knowledge of the company’s investments. After I tell him that I live on the Upper Lisburn Road in Belfast, he says: “Across the road from you there’s a huge Spar investment going on. We owned the site, but have now sold it to Niall Creighton, the owner of Creightons Garage in Finaghy. We’re now working with him to build a 6,000 sq ft Eurospar, 10 times the size of the Spar that was there before, with a view to opening in quarter one next year.”
That partnership demonstrates how Henderson Group’s business operates. Paddy says: “It’s working with independent retailers, like-minded individuals and family-run businesses who are investing — and we are investing with them, and together we will build a fantastic business.
“We have a unique deal with our retailers.
“A Spar retailer pays a marketing contribution which is relatively small at around £4,000 a year, and you enter into a contract for supply.
“That means you buy your goods through Henderson and everything you need — there’s usually an agreement for 90% or 95% — comes from Henderson and our warehouse in Mallusk. So that partnership is usually in the form of a five year agreement.
“When you join a symbol you are joining a buying group and aligning yourself with the one wholesaler who provides you with the goods and the marketing platform — really a support package to drive your retail sales.”
Mr Doody and now joint-managing director Martin Agnew knew each other at the then-University of Ulster, where Paddy was studying business and Martin accountancy.
“I knew him back then, but didn’t know anything about the Henderson family business. To be honest, your mind is on other things at university!
“I graduated in 1985 — a long time ago now but I didn’t get into retail until I joined Henderson. When I graduated, I actually headed off to Australia for 18 months.”
He’s now evangelical about the importance of travel. “It was a great experience and I just really recommend it. I’m always recommending it to my three daughters, who are 22, 20 and 18.
“I have told them to get as much travelling in as possible. I really recommend travel as it broadens the mind and it’s good for your career to have a well-travelled, broad outlook on life no matter what industry you’re in.”
There was a longer-term plan to return to Australia before fate — or should that be, C&C, intervened.
“I started in C&C as a sales rep and had got the job with a view to heading back to Australia to live, but I got in there and loved the job and started progressing very quickly so I put Australia on the backburner. I got married and life happened and I don’t regret not going back there.”
He had a rapid rise in C&C, becoming a director at the tender age of 31. It was a golden age for the drinks business, which then included wine, spirits and soft drinks — as well as its cider brand, Magners, which became a sales and marketing phenomenon when it was launched in 1998.
In 2000 he was sent to Dublin to be the company’s sales and marketing director.
His time in C&C also included the milestone acquisitions of family drinks businesses Quinns in Cookstown and Rehill McKeown in Lurgan.
“I became a director in 1994, aged 31, so that was very young and a bit scary for me, I’ll be honest with you.
“It focuses your mind, but I enjoyed the industry and it was an exciting time with a lot happening, so I got a huge amount of experience.
“We bought the two family businesses and worked on the synergies between the businesses.
“That pulled together and made a good strategic fit for C&C. Then I moved to the Republic to look after the wholesale business and based myself in Dublin for four years.
“I can’t say I forecast the end of the Celtic Tiger, I’m not that clever, but there definitely was starting to be a move away from drinking in pubs and clubs.”
His career has embraced a plc — C&C was listed in 2004 — and a family company.
“I think with Henderson the difference is that it’s a family-run business. Sometimes people might think that with a family-run business you don’t get the same career development, personal development, but that’s not the case at all.
“Division of labour is very clear and it’s very professionally run.
“They really wanted to map out growth in the company at one point so they brough in new skills from the outside, like Sam Davidson from Nortel, and me.
“When I joined there were under 2,000 employees and now there are 2,700, so that just
shows the growth there has been.”
But he won’t speculate about what the longer-term future holds. “We’re a fourth generation family business. What happens next is up to Martin and Geoffreys’ kids, who are in their early 20s.
“Both brothers aren’t actively pushing them, and they want their kids to work in other industries to broaden their horizons.”