The Keystone Group caught up with Patrick Atkinson, CEO of Grafton Merchanting ROI, Ireland’s largest builders’ merchant group to discuss what the future holds for the industry and the importance of embracing new technology.
Tell me a bit about Grafton Merchanting ROI?
Grafton Merchanting ROI’s impact is felt in nearly every county in the Republic of Ireland with a total of 49 Chadwicks and Heiton Buckleys branches. This makes us the biggest merchant business in the country and as we celebrate 200 years of Heitons in 2018 it reinforces our position as the go to source for everything from structural steel to kitchens and bathrooms.
What’s the secret of the business’s success?
It is all about the people, we’ve quite a low staff turnover among the 1350 strong workforce, demonstrating that our people are obviously quite engaged in the business. This enables us to build experience and with 60% having more than 5 years service, it provides a good base for new younger people coming in and mixing with the older experienced employees. That gives us a nice blend of freshness that is coming in post-recession and the highly valuable retained experience.
Nobody else can match our geographic coverage across the country, so that’s a major factor. Everyone talks about service and quality, but these days if you’re not supplying your customers with what they need, when and how they need it, you shouldn’t even be at the game. The thing that really ranks us, is our people and our locations. We are also the biggest steel stockist in the country, as well as the biggest builder’s merchant and the biggest plumbing and heating merchant. This all differentiates us across the country and although we are a national company we focus on getting our local offering right. Our staff very much live and work in the community they are in, so that creates a local feel to the business.
Is training important for you?
Training is very important because good merchant staff need in-depth knowledge to provide great customer service. If you take a supplier like Keystone or Keylite, always bringing in new products, they need to train our guys so we can best represent those products, so I think this kind of supplier training partnership works really well.
Tell us about your relationship with Keystone Group?
It is one of our core suppliers and there is a long history of partnership with the two companies. My predecessor Eddie Kelly would have given Keylite Roof Windows its first entry into the Irish market based on our success with the lintel business. So it goes back quite a few years and has developed into good co-operation.
Do supplier partnerships deliver value?
I think it’s a fundamental need for a good builder’s merchant. If I look at our top 40/50 suppliers I can say that every one of them is really acting as a business partner. We take a longer term view of business, it’s not short term. We don’t spot buy on our core ranges, we look for long-term relationships and we pick the partners who are best going to fit us. We also want to see mutuality, so we want our suppliers to get a benefit out of doing business with Grafton and we need to see the benefit doing business with them.
We value suppliers who deliver loyalty and professionalism with a commitment to their own product and a clear view about where they want to go. We also want their marketing to reflect a good understanding of the sector they are operating in.
Their interaction at branch level is really important because it’s not all about CEO talking to CEO or Sales Director talking to our Category Director. I think that a partnership needs to work at a grass roots level because this is how the support filters right down the business.
Does manufacturer back selling add value to merchants?
Absolutely, for example, if you take Keylite who came into the market against a strong competitor, the impact Keylite makes by back selling its product makes it much easier to covert those sales at branch level. Back selling adds an important dimension to the whole demand creation process.
What does a “100% merchant focus” from a supplier mean to you?
Well if you’re going to have this partnership we talked about, you have to have faith in us delivering the sales. It gets very confusing for the customer if they don’t know if they are buying from the supplier or the merchant. So it’s important to make it very clear what the supply chain is. We offer a local route into the local market and if that’s not what the supplier wants then they shouldn’t try to ride that horse.
If suppliers are not 100% committed to the supply chain we offer, or if they sell direct, then we don’t see them as partners to our business.
What is your view on supply agreements?
It provides clarity for both the supplier and the merchant. From a supplier’s point of view we always deliver what we say we are going to deliver. If it’s about volumes or they have new products they want to present, we take that on board and agree what we can do with it. This process creates clarity, removes obscurity from the relationship and again adds in the mutuality required in a true supplier partnership agreement.
How do you rate the support from Keystone and Keylite?
I think it’s good, the Keystone Group sales team spend a long time on the ground in branches. When I read the reports of all the time they spend talking to our branch guys with training it is impressive.
What next for Grafton?
Our job as market leaders is to lead the market but also we need to be our own market disrupter, so we can stay ahead of the others. If it’s about new branches, we have moved to small box format in the last couple of years, we introduced three of these in Dublin last year, so we will probably see a bit more of that. We have also started a digital journey because it is really important that we are prepared as the market gets more digitised, we are also launching new categories because there are lots of new products and new technologies out there to consider.
Do you see any threat with Brexit?
The biggest threat is the lack of confidence and the uncertainty it brings. Personally, I think common sense will prevail at the end of the day between the two islands, we traded very successfully as two independent countries for decades or even before that.
How long will it be before robots will ‘man’ trade counters and driverless forklifts load deliveries?
We’ve already had discussions here about doing small deliveries using drones, weight is a big issue. In terms of driverless forklifts, there’s a massive investment needed, is that the thing that will add the best value to this business? I’m not sure. Probably some form of picking and packing will happen eventually. A robot on trade counters? As long as they help the customer understand what it is that they need and are trying to do, yeah maybe. I think we are far away from that.
We are in a people industry, where people buy off people. It’s interesting that the white van man is bread and butter to us. We spend a lot of time understanding his journey, his day to day operations and what he does. There are 49,000 construction companies in ROI, more than 70% is one man with another 15% as two men or less, there’s only 2% with more than 10 people working for them. It’s a pretty insular job and I think they enjoy the interaction they have in trade centres and trade counters with their colleagues, having a cup of coffee. Quite a bit of banter goes on there!