Seasoned start-up co-founders put the detail back into retail

16 Apr 2013

John Hogan and Conall Lavery of Real World Retail

Sometimes in life it is the journey and not the destination that matters the most. That could be said of Conall Lavery, a seasoned Irish technology executive who sold his IT security software company Entropy to Calyx in 2006 for €4m, and who has joined John Hogan’s latest venture, Real World Retail, as a director and investor.

Hogan is the former CFO of Heatons Department Stores, who guided the retail chain’s growth in just 14 years from a €20m-a-year family business to a €350m powerhouse.

After selling Entropy, you could say Lavery had reached his destination and no one would begrudge him spending more time on the golf course if he wished. However, as he admits himself, what he really needed was something different.

He invested in various tech start-ups and was named HBAN’s Business Angel of the Year in 2011 and the same year he passed the Pension Board exam, qualifying him as a trustee for pension funds. He also sat on the board of the Corporate Governance Association of Ireland (CGAI) between 2008 and 2012.

But he was restless and what he really wanted was to be involved in the challenge of scaling up a young technology company.

“I liked the sound what John Hogan was doing with Real World Retail and I wanted to come on board.”

What Real World Retail does

Real World Retail is a cloud-based software company that provides retailers with business intelligence technology to help them manage their cash and stock better and achieve profitability.

The company, which started up last year, has already secured key deals to deploy the software. In recent weeks, it sealed deals with players like Uniphar Retail services, which operates 60 community pharmacies across Ireland, and McLernon Computers, a technology company that sells IT systems to companies like Boots and Sam McCauley’s.

“The problem we solve is quite a complex one. Large retailers with revenues over €100m a year can afford to invest seven-figure sums in expensive ERP systems, but smaller retailers just can’t do that. Even when the large retailers invest in the expensive systems they find that the systems don’t talk to each other and they don’t have a complete picture of what they are doing. The investment is often wasted.”

One of the insights Hogan had gained from his time at Heatons was that retailers live and die by inventory. If they buy too much stock they use up all of their cash and can quickly go out of business.

The cloud technology developed by Real World Retail provides buyers for retail chains with a control system that helps them to generate an automatic replenishment report in seconds and which ensures they never buy too much, nor too little.

“The business of retail is detail. Our technology takes away the blank cheque book and allots a budget that is dictated by algorithms based on what stock they started with, how much stock has been sold, what forward orders are coming down the pipeline and also comparing the previous years’ sales. The software also has a merchandising module, which is important because these systems previously had been unviable for small retail chains to invest in.”

So far, three pharmacy chains and a fashion retailer have subscribed to the cloud system.

Eyes on expansion

Lavery said Real World Retail isn’t seeking venture capital investment any time soon, but has its sights set on an expansion into the UK market.

“We’re working with Enterprise Ireland on developing our UK strategy and we aim to target retail chains that would be the next tier below Tesco in size.”

Lavery said one of the important things for him about being at the start-up stage of a business is getting out on the road and doing demos for CEOs and seeing their reaction to the software.

“John had left Heatons two years ago to start a consulting business and what he had was a consulting business that had a software tool but that was expensive to deliver. So we put the software into the cloud, which reduced the entry-level price substantially and this allowed us to offer retailers a subscription model for the software.”

Lavery said his return to the start-up world has re-energised him. “One of the nice things about returning to the start-up phase is being determined not to make the same mistakes you had made before. We all make mistakes and we learn from them. I had a business in the UK before, in the form of a division of Entropy and so I’ve been through the learning curve of taking a business from Ireland into the UK, which was a really interesting experience.

“One of the reasons I sold Entropy was that I had been doing the same thing for 13 years and while I was making a good living, it wasn’t stimulating me any more.

“I find being back in the start-up phase and having a new challenge to be very energising and I’m glad to have my teeth into something new. It’s exactly what was needed.”

Lavery concluded that he and Hogan’s strengths and different business backgrounds complement each other. “We’re a good fit. I’m a technology guy and I love getting out there to talk about the technology. John is an accountant and he is a strong and analytical financial controller whose experience and insight into the retail business is unparallelled.”

A version of this article appeared in the Sunday Times on 14 April

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years