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BALANCING THE BOOKS
Conor Brophy



PEOPLE are still surprised to learn that the Hughes and Hughes chain of bookshops is run by an Irish company, according to founder Derek Hughes. "It couldn't be Irish, " he says, adopting the mock-surprised air with which the news is often greeted.

In a retail market increasingly populated by large global players, the natural assumption seems to be that any retail chain of significant size must have a large multinational corporation behind it. From Zara to H&M, Starbucks to Borders, Irish high streets and shopping centres are increasingly international in flavour.

Hughes is hoping to do his part to retain an Irish element in that cosmopolitan retail mix.

Hughes and Hughes is putting the finishing touches to three shops, taking it to 18 outlets, and is planning to at least double in size within the next five years. The book retailer cut the ribbon on a 12,000 square-foot flagship store in Dublin yesterday and he hopes to be unveiling many more over the coming years.

"We really want to create an Irish retail brand that we're proud to call Irish, " he says.

Hughes has had admiring glances cast his way from retailers interested in expanding into Ireland but says he is in no mood to sell.

"There were encouraging noises from one party but it's not part of our strategy. We've a bit to do in the future before we would consider an exit."

By his reckoning, Hughes and Hughes has a 15% share of the consumer book market in Ireland. Hughes said that, in the year to February 2006, turnover has grown to 31m and, with the contribution from the new shops, the company will aim to grow that to 38m over the coming financial year.

Margins are tight, however. Hughes and Hughes had pre-tax profit of 910,000 on sales of 24.5m in 2004, according to its most recent set of filed accounts. The retail business isn't getting any cheaper either. Staff and insurance costs are on the rise but Hughes singles out rent as the most difficult cost item to keep in check. "With the institutions out there, there is a greed factor and the rent levels can be very challenging, " he says.

That doesn't seem to have tempered the expansion plans. With the opening of two shops in Cork airport in the coming weeks, Hughes and Hughes will have 18 shops. "We want to get up to about 50 stores in the country. So we're about halfway there at the moment. Certainly we'd look to have achieved that within the next five years."

The challenge, from Hughes' point of view, is to achieve that ubiquity without becoming a "faceless corporate" in the process. The bookseller is not a fan of the large multiples, it seems. He says he would not like to see Ireland mirroring the retail scene in the UK.

"You can go from one high street in the UK to another and it's all the same shops, all the same brands. I think what Hughes and Hughes is offering is diversity."

His view is doubtless coloured by the competitive pressure being exerted on his own business by the giants of the retail world.

Supermarket chain Tesco has recently added books to its range of non-food items, offering a small but heavily-discounted range of bestsellers. Tesco's loss leader is Hughes and Hughes' bread and butter, which is a worrying prospect. HMV, owner of Waterstones, has felt the pinch from Tesco's strategy in the UK, a strategy which has also been copied by grocery chains such as Asda.

The cut-price bestsellers are hitting sales at dedicated book retailers. It's not just that customers who would have bought The Da Vinci Code in Hodges Figgis will now buy it in Tesco. The fear for the book sellers is that they will lose the customer who would have gone looking for The Da Vinci Code in Hodges Figgis but bought the latest Zadie Smith or Colm Toibin novel as well.

Hughes believes there is still a role for the specialist book retailer. "There is a huge conglomerisation within the market and I think that's where Hughes and Hughes stands out as an Irish book specialist, " he says.

The newly opened flagship store in Dun Laoghaire illustrates what the company hopes to accomplish. Like many of the larger Hughes and Hughes outlets it has an in-store cafe.

The new shop will also have extended opening hours, remaining open until nine every weeknight. Hughes says it will also have broader range than many of its existing shops, with over 150,000 books.

An ordering service, meanwhile, makes over a million books available to customers, often with five working days, according to Hughes. In the post-Amazon world of nearly limitless choice you need to be able to offer more than just the books on the shelves.

"Our challenge is to create a destination where the books are important but the overall experience is positive and that our customers will want to repeat it, " says Hughes.

More than anything else his shops need to be able to offer a pleasant environment and topnotch service, he says. With competition online and in supermarkets, the pressure is on specialist retailers such as Hughes and Hughes to differentiate themselves. .

In many respects, not least in its embrace of the in-store coffee shop, the Irish chain is following the model established by US bookretailing powerhouses Barnes and Noble and Borders.

The latter has already begun exporting its large-format bookstore model to Ireland, with two sites selected so far. The opening of Hughes and Hughes' own large-format shop is no coincidence. Hughes says he keeps a careful eye on retailing in the US and clearly he has learned much from what Borders has done in that market. But what is Hughes and Hughes going to do to differentiate itself?

Service is vital, says its founder. Having staff with the requisite product knowledge to recommend books and advise customers is a key selling point for a specialist book retailer.

It's no accident, says Hughes, that books shortlisted for the major literary awards experience sharp spikes in sales.

"What people are looking for is guidance and recommendations." His goal is to staff his shops with employees who can provide just that. "We're not a faceless corporate. We have creative booksellers in our stores. The passion is the book and trying to link that with the customer."

He also notes as a point of pride that those who start out on the shop floor with Hughes and Hughes have a clear path to advancement. Almost all of its shop managers began as booksellers, as did several of its top management. "We have a management trainee programme. Our book buyers, our marketing people have all come up through the ranks, " he says.

If the company's ambitious growth plans come to fruit, there are likely to be many more opportunities for the current crop of booksellers to move up through the ranks as the Hughes and Hughes story begins an exciting new chapter.

CURRICULUM VITAE DEREK HUGHES

Educated: Trinity College
Career: Hughes' family has been involved in the book selling business for over 50 years. His father owned a book wholesaler. Derek and his brother Gary opened their first retail outlet, the Book Cellar, at Dublin's O'Connell Street in 1984. In 1995 they opened their first shop under the Hughes and Hughes name, at the St Stephen's Green centre.

Hughes and Hughes now has 18 shops, including those at Dublin, Shannon and Cork airports and its only overseas shop at London City airport.




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