Leo Crawford likes to talk about chapters. His life in business has dealt with the vagaries of both boom and bust, and Crawford has long since realised that there is no such thing as a linear story or a straightforward narrative. Instead, it is a collection of intertwining, competing chapters – some good, some bad.

With the Covid-19 lockdown prompting both introspection and evaluation, Crawford has been reflecting on the varying chapters of his own business journey in recent weeks. As he considers the impact of – and the response to – the jolting economic crisis caused by the pandemic, Crawford has sought to understand it through the prism of the past.

There was the 2002 deal with Electra Partners to buy out BWG Foods. Crawford, along with others in senior management, took about 15 per cent of the retailer in a deal valuing BWG at €220 million. Having been an executive at the chain for several years, the buyout made him an equity shareholder. 

That chapter, a “satisfying one” he tells me, ended in 2006 when he teamed up with John Clohisey and John O’Donnell to buy out the private equity fund in a €390 million deal that was of its time – high on debt and large on ambition. And until 2009, it was a resounding success. “Nothing could go wrong,” Crawford says – until it did. 

“We are a great barometer for the Irish economy because we do a million transactions a day through our stores.”

And so, from 2009 to 2014, Crawford went into survival mode, cutting costs, frantically negotiating with lenders and restructuring the balance sheet to help the retailer navigate the crisis. It was, he says, the most challenging chapter of his career, and one that ended when BWG brought Spar South Africa on board as a majority shareholder.

With its new backer, Crawford and the team embarked on an expansion trail, acquiring Londis, Corrib Foods, Heaney Meats, and 4 Aces. Revenues were growing, profits were up, and there was a continued expansion into the UK market. If the previous chapter had been about survival, this one was about growth and ambition. 

In recent weeks, however, the world has changed, prompting Crawford to end one chapter in his mind and start another one. It is a chapter that will tie together everything from his past – it is both about dealing with a crisis, and spotting opportunities for growth. It is about using the balance sheet to invest in the future. 

“I never thought I would be starting a new chapter of this nature, nor did any one of us. But my business philosophy has always been that you should invest in three key business areas: infrastructure, brands, and people. We have always done that – even in the recession – and I think it is going to stand to us,” he says. 

Crawford’s philosophy is informed by the fact that his group does not manufacture anything. It buys and sells, providing expertise and advice to its network of retailers who operate under its many franchises. 

“People are what differentiates us, it is our competitive advantage,” he says. “In challenging times like this, you learn a lot about how people act and behave in a crisis. I am big into football, so I will use a football analogy. If your team is playing away to Stoke City on a wet Tuesday night – who are the guys that can really roll up their sleeves and really perform for you? I have been really impressed by our team, particularly a new wave of management who are coming through.”

But just what does this new chapter look like? And how will BWG, with its network stretching to every corner of the country, react to the current crisis?

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To understand the company, you must understand the numbers. BWG Foods directly employs more than 1,500 people, and its network of franchised stores employs 23,000 people in Ireland. BWG owns and operates a number of leading retail brands with over 1,400 Spar, Eurospar, Mace, Londis and XL outlets. It has a wholesale business, providing goods into the Irish hospitality industry. It also operates a Spar network across Cornwall and Devon.

Its most recent accounts show a healthy performance – revenues increased to €1.25 billion for the year ending September 2018, while profits increased from €26.1 million to €30.5 million. It had retained profits of €80 million on the balance sheet. 

In a sector marked by low margins and high competition, it has also managed to increase market share – BWG Group has an estimated 12 per cent share of the overall grocery retailing market in Ireland and a 40 per cent share of the convenience retailing market.

“We are a great barometer for the Irish economy because we process a million transactions a day through our stores,” Crawford says. “If it is going well, it is great. But if it starts going bad, you have to be very agile, innovative and responsive.

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With Covid-19 bringing economic activity to a shuddering halt, one of the few bright sparks has been the grocery business. To help meet demand, the supermarket giants are extending hours and hiring more staff. The sight of consumers queuing outside shops, stationed exactly two metres apart, has become a defining image of this lockdown.

Looking on from the outside, retail appears to be the big winner of this crisis. It was one of the reasons I reached out to Crawford in the first place. The more we talk, however, the more it becomes obvious that there are nuances and caveats to this perception.

Yes, many of the retailers that his group supplies are doing extremely well. Sales across the retailer’s network of 50 Eurospar stores – essentially medium- to large-sized supermarkets – are up 35 per cent since the lockdown began, while neighbourhood stores are also doing exceptionally well, Crawford says. 

“There is a huge amount of our Spar and Londis neighbourhood stores doing brilliantly. Mace and XL are doing well too,” he says. 

But Crawford is quick to point out the problems faced by stores impacted by their location – city-centre stores reliant on passing trade or office workers, and forecourt retailers. 

“Look at city centre stories. Some guys have had to let staff go. They now have their wives, husbands and children in the stores to keep those stores open, even though the turnover has gone way down. If you can keep a door open through this crisis, you have a much better chance of surviving than if you had to reopen those doors,” he says.

“Unfortunately, not everyone can do that; but as many of our guys are doing that if they can. It is often just a bounce of a ball if you have had to shut or if you are doing well.”

Others, however, have been brutally impacted by a massive fall-off in revenue. Plus, the group’s wholesale division – which supplies pubs, restaurants, and hotels – has simply been severely impacted. 

“Everyone says, you are in the grocery sector and you must be doing well. But for obvious reasons, the wholesale business is under extreme pressure. It is a significant enough part of the business in terms of our overall turnover – around a third of the overall business,” according to Crawford. 

“We also sell into the licenced trade; obviously that business is gone for now. The two businesses we acquired – Heaney and Corrib – are great businesses, but they are obviously under a degree of temporary pressure. There are challenges in that sector.”

“Even within retail, city centre and forecourts are struggling whereas Eurospar and neighbourhood stores are doing phenomenally well.”

Given that BWG also has an operation in the UK, Crawford is well placed to assess the difference between the two markets. In Ireland, service level from suppliers is operating at between 95 per cent and 97 per cent – meaning that 95 per cent of the order turns up on time, with some substitutes making up the difference. In the UK, the figure is 80 per cent in his network – down on the Irish operation but much higher than other independent wholesalers.

I ask why that is, given that most of the product coming to Ireland runs through the UK landbridge? “That is because the supply chain here is so strong,” Crawford says. 

“One of the benefits of the market here is the fact that you have BWG and Musgraves as very strong market players and servicing the independent trade. And then you have Aldi, Lidl, Dunnes and Tesco. Because independent wholesalers have such a big chunk of the pie here, we have very good influence over suppliers who make sure that our needs are satisfied. 

“If you look at the UK, and I have seen minutes of meetings of wholesale federations, they are going ballistic with certain suppliers. Because so much of their volume goes through the big five multiples over there, they are focusing more on them. The wholesale trade is not as influential in terms of getting those service levels. 

“The Irish consumer is being well served, and I am proud of that. We have a very experienced management team in BWG who have been with us a long time, and it is very good to have that – because they can pass on knowledge to these new star performers that I am beginning to identify in our organisation.”

Overall, however, how is the company faring during this crisis? “We are behind budget. Yes, it has had a negative impact on the business. But let’s be fair, we are doing well compared to so many other areas of the economy and it is important to acknowledge that. If you are in the tourism sector, the travel sector, the aviation sector – they are having a really tough time. We are doing relatively well, and we are lucky in that regard,” he says. 

“But there is a feeling out there that we are doing phenomenally well. We are not because we are diversified in the sectors that we operate in. Even within retail, city centre and forecourts are struggling whereas Eurospar and neighbourhood stores are doing phenomenally well.”

The future of retail

Crawford offers to conduct the interview over Zoom, but we end up conversing on the telephone. Like most people in business, his diary his now littered with calls and virtual linkups. In recent weeks, he has made individual phone calls to more than 50 BWG franchisees, a number replicated by his senior staff. This aim is to stay in contact with the BWG family and find out how they can support the store owner better. 

A planned board meeting will be held remotely later this month. Decisions will be made regardless, but Crawford admits to missing the interactions of personal meetings. His South African shareholders were due to travel across for several days – that would have involved warehouse and store visits, dinners and a few drinks. “To explain to someone in Spar South Africa the dynamics of what is going on here is challenging,” he says. 

I have met Crawford on a number of occasions before. He is personable, warm and witty. His father was a civil servant, he grew up in Marino, the north Dublin suburb near Croke Park. His mother imparted the importance of education upon him, and he initially wanted to become a teacher, but ended up studying business at Trinity after failing his Irish oral test. 

He went to work in Irish Distillers, building his reputation in marketing and branding roles. After training as an accountant, he became IDL’s finance director, before moving to the group’s retail arm BWG in 1996. By 1999, he was running the division. Within three years, he had part-bought it with Electra.

“I used to work in a business where you would produce whiskey and sell it,” he tells me. “Our business is very much about relationships. We don’t produce anything. We provide a service. We buy and sell. We provide expertise and advice. People differentiate us, it is our competitive advantage.”

Nonetheless, change is coming, and Crawford knows that as well. In recent weeks, as the impact of the lockdown crystallises, he has been asking himself several questions.

What does the future look like?

Where are the opportunities here? 

What are we going to do when we emerge from this? 

If there is going to be social distancing into the future, what does that mean?

What are the impacts on our product mix and our stores layouts? 

He has been talking to his international colleagues, and he wants his staff to carry out some blue sky thinking over the coming weeks to come up with innovative ways of doing things. 

“I want the team to get their creative hats on and see what we can do – how we can structure ourselves and organise ourselves for the future. What are we going to do differently? How can we work with our retailers to give them advice in the different categories of stores that we have? We need to think outside the box, be creative and deal within the constraints that you have,” he says. 

“I am trying to leverage the fact that BWG has a great connection with Spar International. We are trying to get an international perspective, to see what is happening in other countries. Spar is very strong in Italy and China, so we would have got guidance from there. It is about safety for employees and safety for customers in the stores. So, we are doing a lot of work with Spar internationally to get the best learnings from other countries.”

The crisis has already expedited change, and Crawford wants to react to it. Take the issue of queuing, for example. Queues drive down revenues, but Crawford believes there might be an opportunity to redesign stores so that customers can buy a certain range of essential, practical goods in a quicker manner. 

“In terms of future trends in retail, private label is going to become important again and Spar International is working on this. We have Spar private labels, and we are looking at doing something else in that space. It is one of the benefits of being part of an international grouping,” he says. 

“We also need to look at things like Click and Collect. Convenience has not been really good at that, but we need to do more on it. In Italy and China, you can get a community drop to a designated spot for people to collect their orders. It is interesting how you can adapt to the new situation.”

Likewise, if cash is no longer in vogue, how can retailers use technology to get customers in and out of the shop as quickly as possible? Everything is considered, he says. 

“I am trying to get our teams motivated and get the creative juices flowing. In May, I want to get our thinking hats on and get ourselves ready for the reboot,” he says. 

“Spar International has a view on what is going to be the future trends in grocery – and I agree with them. First, online and delivery will become more important, and it was growing anyway. Secondly, discounters are probably going to do even better. The unemployment rate has gone up and people are going to be searching even more for value. Price is going to become very important. Thirdly, you have got convenience – and convenience has big opportunities in terms of proximity and offering a great innovative service.”

There are other issues weighing on his mind that need to be addressed, such as coming up with solutions for BWG’s empty city centre stores and also its wholesale division when the lockdown begins to end. 

“There are always opportunities in a crisis,” he says. “We have all been in shock for about a month. We need to move past that shock now and play the hand we have been dealt – and maximise it. This is the challenge, but it also the exciting part of the new chapter I never thought I would be involved in.”

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Amid the chapters of Crawford’s journey, it is impossible not to look back at how BWG emerged from its near-crippling debt burden. As boom turned to bust and bust turned to tentative recovery, the group continued to trade well, but was struggling under its colossal borrowings. Crawford has spoken previously about the first three months of 2014 being the worst of his career. Just months before, advised by Investec, the group reached a complex accord with its banks that amount to a form of debt for equity swap. 

Shortly after, however, Lloyds said it was selling its debt. Faced with the prospect of a fund buying up the debt at a discount, he rallied and brought Spar South Africa on board. Lloyds and Ulster Bank exited, with Spar South Africa putting up €55 million and taking on even more of the company’s existing debt of €130 million. Crawford, Clohisey and O’Donnell retained 20 per cent, but the new investors had an option to buy that stake if certain conditions were met.

Last year, it emerged that the conditions had indeed been met, with Spar South Africa reporting to the stock market that it was paying the three executives €41.5 million as part of a €81 million deal to absorb the 20 per cent. The deal valued at the business at €415 million, a remarkable turnaround in the space of six years. 

How to reboot the economy

Crawford is keen not just to talk about the impact on his own business, but also on ways the economy can recover when the pandemic erodes. He is acutely conscious that BWG is better equipped than most, but, as a former president of Ibec, he says it is important that we now start to have a wide-ranging discussion about Ireland’s economic rehabilitation.

He was struck by an article he read in a US publication recently, even taking down a line from the piece, stating, “How will leaders make the trade-off between minimising deaths from the virus and restarting the economy?”

It is a question that he has been thinking deeply about and he admits the issues and the debate are highly complex.

“The vaccine is going to take time to develop, and people are going to have to start taking risks again. It is a really interesting debate,” he says.

“In terms of where we are at in Ireland, I think the government have done a good job. I am being apolitical here, but I think we are really lucky that we have a Taoiseach who is a medical doctor. Our government has not got everything right in terms of the response. There is a lot of issues in our sector about the €350 Covid payment – why would you work in a store when you can take that payment? But by and large, I think they have got it right.”

He does, however, believe it is time that a new government is formed, admitting he has been disappointed to date with the reluctance of the smaller parties to enter government. 

Also, on his mind is the idea of a recovery taskforce, which he believes should be a small, tight-knit group that can make swift decisions on the issues that matter.

He has given it some thought at to who would sit on it, and would put the Taoiseach, the finance minister, a representative from the banks and the central bank as well as Ibec’s Danny McCoy. He would also like to see someone of the calibre of the late Feargal Quinn on board, a businessperson of integrity trusted by the public.

“I am so close to so many retailers who hare hanging on at the moment, barely keeping their doors open. That can’t go on forever.”

“In the last crisis, I spoke about the paradox of thrift. We are experiencing it at the moment. You are not in a position to spend money, apart from your essentials. People with disposable income – and I appreciate not everyone has this – are normally out creating value in the economy by spending, that is not happening at the moment. 

“If we don’t reboot the economy and we create even higher unemployment, that is a double negative. Higher unemployment leads to more social welfare payments, and more drains on the Exchequer and an opportunity cost of people not being able to spend.”

Crawford would increase capital spending on housing and roads to boost industry, and also introduce grants for small businesses. 

“Could we provide liquidity grants for small business to reboot then? The fundamentals of this economy were strong before this started. This is a temporary blip at the moment. If it became more than that, the damage to the Irish economy would be devastating. And some of this goes back to the moral argument about health and economy, but if we can find some way to reboot the economy and get to liquidity to companies, it would make a difference – even if we had to give small businesses free grants. It might actually make sense. We need a small task force to make decisions quickly. I feel passionate about that.

“I am so close to so many retailers who are hanging on at the moment, barely keeping their doors open. That can’t go on forever. Can we help with rent breaks? We need to consider all of this. SMEs are the backbone of this economy. It makes financial sense to reach a solution where we can help them and ensure the economy keeps going.”

A changing landscape

Since the lockdown began, there has been a number of major high street casualties. Debenhams has closed its Irish footprint, as have Laura Ashley and Warehouse. It is expected more will follow amid changing consumer habits and high rents. Crawford expects that there will be a lot of vacant shops on Irish streets when the lockdown ends. 

“The capacity levels at the moment are now too high for what is going to happen, and you are going to have vacant lots. That represents opportunities for other players, and the stronger players who survive in different markets should grow their market share. Unfortunately, that is the reality of life.”

I end by asking him the difference between this crisis and the last financial crisis. “There are a few differences. As human beings, we like to have a start and a finish date. We all work on that basis. The problem with this one is that we don’t know the finish date, or even the interim dates. That is a big challenge,” he says. 

“The Irish economy is very strong, and more resilient to deal with it than other economies. The challenge is the reboot – how do we get people spending again and how do we restore consumer confidence? That has different strands to it. Consumers will be nervous and might not go to places like the pub. The challenge is to get people comfortable spending again – and that is about rebooting small businesses. 

“We had a fundamental problem the last time. Banks were failing. We don’t have that this time, but the clock is ticking against us. If there were no health issues and we started the economy tomorrow, I reckon we would be OK and get through it. But the longer it goes, on the more damaging it becomes. This crisis is not a fundamental economic problem. It is an act of God. But the longer it goes on, the more it will become a fundamental economic problem.”