Contrasts - Brendan O'Regan and invention of Duty Free.

Brendan in the early days.

I saw an item on TV recently about the erection of a statue in a place called Sixmilebridge, Co Clare, in Ireland, to Dr. Brendan O’Regan. Who was he, many would ask — probably one of the greatest Irish innovators of the 20th Century or indeed of any time. The erection of a statue is hugely deserved but it cannot even begin to quantify what this man achieved or do justice to his legacy.

I’m not too sure as to what positions Brendan held in Shannon Airport, but I think he may have been Commercial Director and ultimately the CEO. He was an innovator in the true sense. Shannon Airport had been developed as a stopping off or transit point for aircraft coming and going to the USA because it was so centrally located and because in those days, aircraft needed refueling stops. But he knew that the transit stops wouldn’t be enough to maintain profitability, so he set about creating other businesses to augment aviation revenue.

Shannon Airport

Among his inventions were a hugely successful mail order business (long before the internet), a tour company, mediaeval castle banquets, the best known of which is Bunratty and a highly successful catering company. But there is no doubt that his greatest achievement was the invention of airport duty-free retail. He persuaded the Government of the day to allow sales of goods to travelers who were in transit without payment of duties and taxes. This exciting innovation began in a small kiosk but very quickly grew into a large department store. The idea also spread rapidly and before long, everyone was doing it and fortunes were made in the process.

Moscow Arrivals Duty Free - opened in 1988 - because of the timing and the total lack of western consumer goods in the then Soviet Union, this shop probably achieved the highest ever turnover per square foot of any shop anywhere, ever!

He further developed the idea into an entire tax free zone which Shannon still holds today. The concept has been adopted in many other countries, as far away as China and everyone who adopts the concept have visited Shannon to see how it works.

The seed of innovation sown by Brendan O’Regan grew steadily in the minds of many other great people who followed him, far too many to mention here. They went on to innovate in many other areas and the results of this can be seen throughout the world. The airport retail industry is worth over 500 billion in direct sales annually and has created hundreds of thousands of jobs, not just in retail but in suppliers and manufacturers also.

Some of the most well-known of these were the shops developed by Shannon Airport staff in Dubai and in the then Soviet Union. I am not going to go into the history of these developments in this article; perhaps on another day. Suffice to say, what started as a seed planted by Brendan grew into a massive operation which developed businesses in Russia, China, India, the Middle East, the US, the Caribbean and of course in Europe.

Most of these businesses are thriving to this day. This is where our story begins really. Although I never worked in Shannon Airport, I was lucky to be involved in the wider organisation and privileged to take part in some of the developments in many corners of the world. There is no doubt that we had a good business concept but so had others so in many instances, it was being Irish that opened doors for us; that, and the pedigree of being the people who invented the thing in the first place. Irish people in general tend to be modest and self-effacing while at the same time being highly professional. And so, in our own quiet way, we tried to impart some of our knowledge and our organizational skills to the locals in the places that we developed. This worked and led to further initiatives. We also tried to organize groups into commercial organizations to try to make some money, which was obviously the primary motivation for both of us.

Even in deepest Siberia, the concept has caught on.

Not only were our businesses successful, but a great camaraderie also grew out of them. Irish people, generally speaking, tend to be good talkers. We tend to be relaxed, we tend to have a bit of fun and we like to socialise. So did most of our partners. We like to be casual. We like to relax but we don’t do formality like some other nations. We always liked to be on first name terms with our partners and our staff. So we tended to fit in easily enough in cultures where they either had had enough of formality, or were casual anyway from the start. It was easier, with a relaxed attitude to implement our organizational skills and because of our ability to chat with people, we had, as the modern buzzword says, ‘people skills.’

We tried to introduce and then ingrain what we called a ‘people centred culture,’ where all our staff were respected, paid a reasonable salary and consulted on business decisions. For me, the idea of involving all retail staff is essential in a retail business. How will you know what to sell to potential customers if you don’t ask the people who are interacting with them on a daily basis? We found that staff loved this approach and readily embraced it. This helped to forge very good business relationships initially and then ultimately, friendships, many of which have lasted a lifetime. Many Irish people have married locals and reared families. And there’s been a lot of inter cultural activity and exchanges.

Brendan O'Regan started a global concept which reaches as far as Siberia.

Unfortunately, in some places the experiment didn’t last. My greatest regret in this regard is Russia. Sadly, nowadays, most of the old habits have returned. Staff are disrespected and paid minimum salaries. They have no involvement in retail decisions. There is a huge divide between them and management. The attitude is — ‘these people are lucky to have jobs.’ Even in the current situation, some businesses are still profitable, but they could be so much more so. Now I’m not saying that this is true of all businesses but it is certainly true of most of the places the Irish developed. More than 90% of the people whom I worked with have left. Salary levels are lower now than they were in 1988 when we started the business. Staff turnover is at unreal levels. Needless to say, there are no Irish people left in any of these businesses. It would bring tears to the eyes to see how far they have regressed. The annoying thing is that they had such hope; such potential. I once put a team together in Novosibirsk of some of the brightest, most talented group of people imaginable. These people were ready to take on the world. The good news is that they did; the bad news is that they all had to leave Russia to do it. Is it related to the way the country is governed; the predominance of the super-rich and the privileged, to the exclusion of everyone else? I’m sure it must be a factor. Russia has more natural resources and territory than any country on earth. Had they used these resources more wisely, and treated their people with some respect, they could now be the most powerful nation in Europe, possibly the world, with a population equitably treated. Instead they’ve got oligarchs, super rich, ultra-rich, a small middle class and a huge rump of relatively poor people.

But it’s not all bad news. I’m sure Brendan would be delighted to see how his legacy is thriving in so many other areas. The Middle East is a prime example, with Dubai and Bahrain constantly setting the highest standards in the industry. Both businesses were developed by Irish people and are still managed by them. On a personal note, Turkey would be my example. I’m not saying the country is ideally governed but it is a democracy and it has made enormous strides, particularly in the western part. Istanbul international is now arguably the finest airport in the world. It treats its employees like human beings, like partners. They respect them and involve them in business decisions. As a result they are thriving and sales have never been better. The state of the business here would also bring tears to your eyes, but in contrast to Russia, they would be tears of joy. If I look at Turkey, I can safely say my work is done. It’s not that they weren’t smart business people to begin with; they were but now they are even smarter.

Dubai Duty Free - World Leader - also started by Irish pioneers.

If only people would come into a business and leave their egos at the door; look at how best the operation could work; involve all their people — take everyone’s counsel — realise everyone has a contribution to make — it would make for thriving businesses. It is possibly this element that has made Irish people successful, not just in my business but in many others throughout the world. It’s not complex — it’s a simple philosophy — try it in your own business and watch it grow. And if you need more convincing, just look at my two contrasting examples.

Footnote: In his later years, Brendan O’Regan set up an organisation called Co-operation North, to promote peace in Northern Ireland, which was highly successful. He was described by Irish President Mary McAleese as ‘a true visionary.’

Russia

Duty Free

Business Philosophy

Turkey