Guiding a business through good times and bad

Take everything you assume about how a business works and then consider this: you flourish in recession and suffer in a boom. That has been the story of the Kilkenny Group since the 1980s when it was bought out by the Blarney Woollen Mills company.

Despite trials, tribulations and inverted economic experience, the company recorded its best year in 2013 since splitting from Blarney over a decade ago.

It is a fitting conclusion to a 50-year history – Kilkenny celebrated that milestone in 2013 – for a company initially set up by the Government to promote Irish wares. Yet there is a sense or rebirth around Ireland’s most famous craft store.

Since its switch to the commercial world in 1988, much has changed.

“We believed it was the right move at that time because we were promoting a different range of products [at Blarney]; even though it was on the same street, Kilkenny was known for promoting Irish products and we expanded that and made it more commercial,” says Marian O’Gorman, chief executive of the family-run business.

“The reason we bought was to avoid any competition coming into the street. All our suppliers thought at the time that we would be putting in all the same products as Blarney which was very tourist-driven. That’s exactly what we didn’t do.”

What followed was a commercial overhaul; the family retrained staff and reviewed every aspect of the business from footfall to price points.

“Some of the products were very traditional and maybe a bit old-fashioned so we modernised some of the products by working with the designers,” O’Gorman says. “We would say we were the leaders in that field; if you look around, you won’t see anyone promoting that amount of Irish produce.”

Many might wonder what prompts a retail business to expand so aggressively in the midst of a recession. In the 1980s,O’Gorman says, Ireland may not have been doing well but there were plenty of tourists who kept both of their businesses going.

Neither did they have to borrow, Blarney being cash rich as it was. She adds: “In a recession, people want to support Irish jobs and they want to buy Irish.”

But then came the Nineties and the early years of the Celtic Tiger, both eras ushering in different kinds of problems that brought with them a period of turbulence. “There was a bit of family conflict at that time. We came to an agreement and split the company.”

That was in 1998 and it was a troubling time. O’Gorman ended up with the Kilkenny brand and she admits that, from the get-go, “we had five or six very difficult years”.

The Kilkenny store was faced with one challenge after another – the September 11th attacks on New York and Washington DC in 2001, foot and mouth disease, Sars – each cutting tourism and damaging business in spite of a healthy domestic economy.

“Honestly, I didn’t think we would come out of it. We had everything thrown at us. I suppose in 2005 it started coming around again but in those first years, I didn’t think we would make it,” she recalls.

“We were on our knees. We started to expand in 2008 [but] the recession hit again and, like every other retailer in Ireland, we were hit for a few years. We came out of it [the previous trouble] in 2006, 2007 and then in 2008, back into recession.”

This time they didn’t have the tourists. “Sales dropped by about 30 per cent for a couple of years and we did a review of our costs.” With adept management, though, things were to turn again.

“We had a survival plan in place and our staff were fantastic and worked really hard to help us to do that. Most of them are still with us.”

The response: funnel money into PR and advertising. “We increased our advertising by 100 per cent. In 2009 and 2010, we started to grow again and rents came down (by 50 per cent since 2007 with shorter leases) and costs came down and that all helped. We are on a very strong footing again and last year was the best year we have had since we split from Blarney.”

Now Kilkenny has 13 outlets all over the State, something inconceivable a few years ago.

The future is bright. A couple of months ago it linked up with eBay, only the second Irish company to do so. Internet sales could grow to about 10 per cent, Kilkenny says, but will pose no threat to the core retail model.

“People like to pick out their gifts and to come into our store,” according to O’Gorman. “That is why we are opening stores; we don’t see it as a threat.”