Interviews  >  Tony O’Neill: The King of Retail

Sandpiper CI is arguably the most recognisable name in Jersey and Guernsey's retail sector. Responsible for running franchises of top UK brands such as Marks & Spencer, Iceland and Costa Coffee, it has undergone significant changes in recent years.

Formerly CI Traders plc, Sandpiper is jointly owned by real estate fund management group Europa Capital and private equity firm Duke Street, who acquired the business in 2007. Tony O'Neill, who worked on the acquisition with his investors, has helped steer the company through the stormy waters of the financial crisis and has overseen the sale of many of its assets and the introduction of new brands, with the consequent restructure of its operations.

Sandpiper remains the largest private employer in the Channel Islands despite the sale of its main supermarkets to Waitrose and 62 pubs to the Liberation Group. The recent announcement that it has taken over more units at Liberty Wharf in St Helier is another key part of a major programme that has seen the company consolidate and strengthen its position. But what comes next?

Tony took a few moments out of his schedule to head down to Liberty Wharf and share his vision with businesslife.co.

Sandpiper has been operating across the islands for four years now. Tell us what have been the major highlights?

There are three things, I think. First of all, I recall being interviewed by Channel Television the day we made the acquisition and laying out all of our plans – divesting the non-retail businesses, getting a real focus on retail operations and carrying out a programme of significant capital investment – and that is exactly what we've done. Secondly, we've established ourselves as the first-choice franchise partner for brands looking to come to the islands.

And finally, the sheer breadth of changes we have gone through – we've sold the pubs, we've sold the supermarkets, we've grown franchises out of nothing, we've regenerated our food-service business, Cimandis, and we've sold off the non-core bits and pieces. There's not one element of the business in the last four years that's not gone through a huge change, and we are now stronger and more focused than we have ever been.

You say you have sold all the non-core assets, yet you still have the St Pierre Park hotel in Guernsey in the portfolio. Why is that?

St Pierre Park would have been sold had it not been for the financial crisis – put simply, economic events overtook us. So we appraised the situation with the ‘Grand Old Lady' and decided we needed to drive it forward. As a result, we spent just under £2 million last year on upgrading facilities, and we just signed off another half million that we'll be spending in January to upgrade the function rooms. I'm pleased to say that the hotel is currently trading very well.

How big a challenge was the economic downturn, and what other challenges have you faced in the last four years?

Undoubtedly we didn't pick the greatest time to make the acquisition! In spite of that, in every one of the four years we've been trading, we've exceeded the targets we set ourselves. One of my biggest challenges was to establish a team of people who are now very proud to work for Sandpiper and to achieve the goals they set themselves. On top of that, we've taken on the might and the buying power of the Co-op and – more recently – Waitrose and we're still growing our market share. On a more day-to-day basis, one challenge is to do our best to deliver good standards – the islands aren't renowned for great customer services, and we don't deliver the best customer service every day, but we try as hard as we can to do so.

That's an interesting admission. Have you had specific complaints about customer service?

No more than the next retailer I guess, but we are our own harshest critics. Some of our customers may be surprised to learn that we spend a six-figure sum ‘mystery shopping' all of our stores four times a year. Without exception, all of the brands we operate under franchise are also mystery-shopped by the brand owners who send people over here. I would be deluding myself if I thought we couldn't always improve the standard of service we offer, but it is something we are very focused on improving and our store managers' bonuses are linked to their mystery-shopper scores.

You sold your supermarkets to Waitrose, which created direct competition for your Marks & Spencer franchise. Tell us, how has that played out?

When we sold the supermarkets to Waitrose – incidentally for a very full price – we naturally recognised there would be some impact on to the Marks & Spencer brand, as the consumer offer is quite similar. To date we are very pleased that the impact has been within our expectations. The one thing that has to be recognised is that there is great brand loyalty to Marks & Spencer in both islands.

I can tell you three things: firstly, and contrary to popular opinion, in spite of the sale, we still remain the largest food retailer in the island when you look across all of the brands; secondly, contrary to comments made by some of our competitors, we're also still the largest purchaser of locally produced food and services – we buy from more than 70 local companies; and thirdly, our total sales of food have grown substantially in the last 12 months, we've grown our market share, and Iceland has been an absolute runaway success. So all in all, yes it has been more competition, but this has been good business for Sandpiper.

Private equity generally only stays invested in a company for a set amount of time. Is there an exit strategy for Duke Street? Is Sandpiper being positioned for sale?

Private equity normally looks to divest after an average of five years, but these are not normal circumstances – the economic climate can't be ignored. Having said that, I have no doubt that at some stage, conditions permitting, my investors will look to exit, but as we speak we aren't being positioned to sell.

Liberty Wharf has been labelled a ‘white elephant' by some people, yet you have taken over the empty shops and promised to fill them. Is that a bold business move, a big gamble or a bit of both?

Someone said they should be calling it Sandpiper Wharf not Liberty Wharf! We reached the decision as we believe Liberty Wharf will come to be regarded as the jewel in the crown of Jersey's retail environment. We currently trade out of four units, including the Marks & Spencer Home Store, and we've agreed terms on three more of the units and expect to open stores in March 2012. I admit that we've been disappointed by how long it's taken the developer to fill the empty units, but from my perspective this is about building our business for the long term. We see retail patterns changing over the next few years and we're making sure we are in the right place to be able to capitalise on that.

With Duke Street acquiring Wagamama, are we likely to see that in the islands soon?

What I would say is that we are completely clear about the partners we wish to work with. We don't have a ‘scatter gun' approach – on the contrary, we have done a huge amount of analysis of the market and we know and understand the gaps by various sectors in terms of where the opportunities are. That's why we are moving into clothing with our new Jack Wills and Crew Clothing franchises. I'm currently talking to at least half a dozen UK brand operators including Wagamama – some of these will come to fruition and I expect more new brands in 2012. This year, we have created more than 70 new roles for local people. I expect to exceed that next year.

So it certainly seems as if 2012 is going to be a busy year for Sandpiper.

Yes it is, but to be honest, we need to focus religiously on providing the best possible offer. The great challenge is always to develop for tomorrow and manage the business for today. The environment is not going to get any easier in the foreseeable future and we need to stay ahead of the pack. We recently created the new role of Business Development Director, who's not just responsible for new franchises, but also for identifying new channels to market, acquisitions, and potential new territories where we can exploit our proven expertise in managing franchises in partnership with major brands elsewhere. So yes, it's going to be a busy year!

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