Innovative Retailers - All About Food

Brought to you by Retailinsider.com and PCMS

The Name: All About Food

The Place: On the shelves of all the leading food retailers and one restaurant in Dartington, Devon.

 The Story: OK, so it’s not strictly a retailer, or a manufacturer, or a distributor. It’s more of a licensee. But it’s a cracking idea and no one else is doing it so I’m going to tell you about it.

Phil Lynas: Knows all about food.

Fire ahead: Back in late 1990s Phil Lynas, the MD, worked at Pataks and was a man who knew his table sauces, dips and marinades. The well known South African restaurant brand Nando’s approached Lynas to help them understand the UK market better as they felt it could be a big market for their range of cooking sauces. And before you can say Peri Peri Chicken Lynas was running a new business importing and distributing their lines – Nando’s Grocery.

Hot stuff, but one product does not a portfolio make: Quite right. In 2002 cult veggie brand Cranks went into administration and closed its restaurants. Lynas snapped it up out of administration sensing a great opportunity to use the brand and develop its range of sandwiches and ambient food for the supermarket. (One restaurant is still operating under the Cranks brand in Dartington, Devon.) And now in Holland & Barrett and Waitrose for example you can buy the famous sandwiches with names like Hey Pesto, Fungus Maximus, and It’s the Slaw.

OK, that’ll do: No, I like them. Eggstacy, Cheddar Gorge and Argi Bhaji .

Enough already: Fine. The next thing is that Nando’s Grocery changed its name. Well, it was a bit off having the chicken-protecting Cranks brand paired with the chicken-eating Nando’s brand. So, The Grocery Company was born. And at this point the Lynas factor comes into play.

The what? His oft quoted line ‘Two’s company. Three’s a strategy.’ He approached Wagamamma in 2006 and developed with them a line of stir fry sauces and obviously on a roll he successfully tendered for the contract to do the same with Pizza Express salad dressings. So with such an international spread of food they finally changed the business to All About Food in 2008.

Phew: They turned over £15m last year and expect to be 10% up on that this year. And all this from the simple idea of getting the sauces and marinades that you like using in your favourite restaurant on your table at home. La Tasca now has four Spanish sauces in Asda, Gourmet Burger Kitchen has a range of burgers in Waitrose and Wahaca is the latest launch with three Mexican table sauces. Mexican and French (!!) cuisines by the way are Lynas’ hot tips to watch.

I’m sensing a trend here: Well spotted, Lynas firmly believes that the casual dining brands work best for this model. He could sell lots and lots of KFC developed products but the model would not support a good profit margin. Likewise he could sell a very upmarket range from The Ivy but probably wouldn’t sell much. Where he wants to be is where your average family go and expend a reasonable amount on a dinner reasonably often. He wants experiential brands so that when the consumer reaches for a bottle of Pizza Express salad dressing they trust that it will turn their meal at home into the same experience that they enjoyed in the restaurant. The social engagement with the brand is a great starting point.

And who else is on his radar? There is a biggie launching on the horizon but he is remaining tight lipped – the only clue is that he has to source very ethically for the range. Go figure. In terms of the whole company they do not want brands that cannibalise each other. They have an Italian, a Mexican, a South African, a Spanish brand already but the most important thing is that the portfolio operates well in core categories like being very scale-able both for manufacturer and retailer.

Here's a hot-seller for you.

Talking of scale, who exactly is making all these sauces for them? It works like this. There are three manufacturing plants in South Africa – not surprising since 85-90% of sales are driven by Nando’s. There are two suppliers in Italy (Pizza Express products come from there) and four in the UK. The timeline from approaching a brand to launching on shelves is around 9-12 months and in that time you have to work with the restaurants’ development chefs on the product, with their design agencies on the packaging, organise a promotional campaign, and gear up the manufacturers. His growing sales force then focuses on the multiple grocers and he uses another company to work on cash & carry/convenience stores and the like. And most important of all…

Yes?  Protect the brand. These are big restaurant chains with multi-million pound turnovers. Their scale means Lynas does not need shops himself. As he says, there are hundreds of shop-fronts for the Pizza Express range of salad dressings, and they are called Pizza Express restaurants.

Genius. And his own ideal sauce brought to market would be? Ah, the steak and ale pie sauce from his local pub the Eagle and Child, known locally as the Bird and Bastard. Yes, thank you, it’s a family show. Seriously now, Lynas sees no shortage of new brand opportunities and still thinks there is vast mileage in the brands they already have. In fact the only thing he needs now is the one thing he can do nothing about.

And that is? For the 'blooming sun to come out' because that's when he sells shed loads of his sunny products.

PCMS Group is a leading independent supplier of software and services to the retail industry; PCMS Store and Multi-channel solutions have been chosen by over 98 retailers including Arcadia, John Lewis and M&S. 

Guest Slot - Recruitment Insider - Nigel Sapsed

I’m in the people business and so probably are you because retail is very much people oriented. It’s therefore amazing how many businesses in this industry (and that of the leisure sector) have a total disconnect between the people at the top of organisations and the rest of the employees.

Disconnected: a common complaint in many companies.

Part of my role is to undertake surveys of employees, which is always enlightening to say the least, because it highlights just how often there is a serious disconnection between those running the show and the rest of the team.

This is not a problem at the strongest-led companies, and within such organisations are some of the most satisfied people. At the crux, it involves having clarity of vision and a strategy that is clearly communicated throughout the business.

The obvious example is Apple where the most amazing people work on the shop floor. You almost get the impression that they would work there without being paid such is their enthusiasm for the products. But this is only channelled into great service by the strong management vision.

Another great operation is the Lancaster Hotel in London where the general manager is running a £45 million business, which can seem like he is in charge of a whole town. His stance with his team is that ‘it’s your business, not mine, so you run it as you see fit’. He’ll help and guide them and those who fly, fly while those who don’t will likely get booted out.

It’s harsh in some ways but it works - especially compared with the alternative of taking the head in the sand approach and not wanting to listen to anything your employees say. It effectively means operating a closed-door-closed-mind policy that contributes to stifling vibrant individuals.

A recent survey I’ve been working on highlighted how one company’s top managers have the view that ‘this is my company and I’ll run it how I like’. Such is the disconnection caused by this approach that its employees put their future career prospects entirely down to luck. They reckon it depends entirely on who are their direct managers rather than their actual abilities.

Innocent but not naive about managing people.

This is very dangerous because valuable people want to be led in a clear and vibrant way. I’d say Innocent Drinks is another good example of how to successfully manage people. Its strategy is to be the best fruit smoothie producer and against this backdrop the management say: ‘How you run your life in the business is your choice. Go and do it and keep in touch’. Sometimes they’ll stop by and ask what employees are doing? And ask if they can help them in any way.

In contrast, pub business Mitchells & Butlers has a bad case of disconnection as its senior level people have been all over the place – with boardroom coups and arguments – that has led to a dearth of clear direction given to the employees. But despite this the people on the front-line have been delivering the goods. 

The big question, therefore, is how long can this disconnected situation last and just how successful could M&B be with proper connections (and clear communications) between its management and employees. What exactly could this business be with a strong chief executive who can communicate a strategy coherently?

The retail sector undoubtedly has one of the best communicators and advocates of connectedness - Sainsbury’s chief executive Justin King. Consider that at the top of the company’s balanced scorecard, which it uses for its employee assessments, is ‘Colleague Engagement’.

If you don’t achieve a certain percentage against this metric then effectively your appraisal finishes and you go back into training. The company’s view is that you’ve got to engage with your people.

Without having a strong connection with your employees then I question just how well you can be connected to your customers? I suspect we all know the answer to this one.

Sponsored column by Nigel Sapsed, director of executive search specialist Sapsed Stevens

Top 25 Drinks Retail websites for May

Brought to you by Retailinsider.com and Cookie Reports

The upper echelon of the UK’s drinks retail websites are performing more strongly in May than last month, according to the monthly Top 25 UK websites for drinks retailers, produced exclusively by website testing specialist Sitemorse.

All the top five this month scored more highly than the 5.72 achieved by the fifth-placed retailer in April – Fortnum & Mason. In fifth spot this month is Budgens with a score of 6.22, having moved up two places. It is beaten by Fortnum & Mason in fourth place, Aldi in third and the top two places are held by the same names as last month – Spar (UK) in top spot with a score of 7.26 and following closely behind The Whisky Shop with 7.10.

The variety of these names highlights the objective of the Top 25 table is to give a cross-section of the category with the constituents comprising large grocers, pure-play operators, and specialist multi-channel retailers. They combine a mixture of transactional sites and those of a purely informational nature.

To produce the rankings Sitemorse runs automated software that page-by-page reads the first 125 pages of each website and analyses on the basis of six key criteria - function, code quality, user experience, accessibility, performance and SEO capability.

The fact there are 10 names in the table that hold the same position as last month compared with only seven last time, indicates a greater consistency being achieved among the constituents. This might well highlight a maturing among the businesses in the table in how they run their online operations.  

This maturity in the sector can also be seen in the IMRG Capgemini e-Retail Sales Index that showed only a very modest year-on-year jump in April of 1% for the Beers, Wines and Spirits category. However, this is against very strong comparatives last year because in April 2011 the category experienced growth of 55% on the back of the Royal Wedding celebrations.

Top 25 Drinks Retail Websites – May 2012

Company Name                      +/-       Score out of 10

1.      Spar (UK)                     same   7.26

2.      The Whisky Shop         same   7.10

3.      Aldi                              +1        6.63    

4.      Fortnum & Mason       +1        6.24

5.      Budgens                      - 2        6.22

6.      Bargain Booze             same   5.86

7.      Lidl                              same   5.19

8.      The Wine Society        same   4.82

9.      Iceland                         -4         4.69

10.  Londis                          + 2       4.38

11.  BeerMerchants.com   same   4.14                

12.  Sainsbury’s                  - 2        4.02

13.  Majestic Wine             + 3       3.84

14.  Naked Wines               - 1        3.66

15.  Asda                            -1         3.46

16.  The Drink Shop            - 1        3.41

17.  Tesco                           + 1       3.28

18.  Selfridges                    + 1       3.10

19.  EH Booth & Co           + 3       3.02

20.  Waitrose                     same   2.84

21.  Marks & Spencer        same   2.58

22.  Virgin Wines               - 5        3.38

23.  Laithwaites                  + 1       2.04

24.  Sun Times Wine Club  -1         1.79

25.  Slurp.co.uk                  same   1.78

Cookie Reports offers a unique level of automation and precision to map retailers' ‘cookie landscape’, producing reports that will help secure legal compliance, combat data leakage and improve site performance.

Retail Species - The serial entrepreneur - Luke Johnson

The Person: Luke Johnson

The Company:  Too many to mention but Pizza Express if you insist we name one of his ventures

The Job Title: Serial retail entrepreneur

So there’s  young Luke Johnson all set up to be a doctor, studying medicine at Oxford, a steady profession  if ever there was one and he gives it all up? Correct. He found the excitement of business too attractive, didn’t fancy ten years of study and switched to another (shorter) science course.  Allegedly it was Richard Branson  who turned him on to business  after he interviewed him for a student magazine. And as Mr Johnson himself says entrepreneurship is the most fun you can have with your clothes on.

Well I wouldn’t like to say I’m sure…  Anyway, he couldn’t wait to get at it. But first he did a stint as a media analyst which no doubt proved useful in his recent chairmanship of Channel Four. And ever since then the word ‘polymath’ has really not done him justice.

I really feel the need to  talk about doughballs? Indeed, they are very important. As he says the Pizza Express deal made his career and even if it did not make him the most money of any of his deals it transformed his profile and gave him confidence. He took a chain with 12 outlets in 1993 and increased it to over 250. The share price went through the roof and he sold it in 1999. But by then he had his sights set on some of the crown jewels of the restaurant world.

Strada? No, cheeky. Although obviously he did start that chain too .  I meant The Ivy. Johnson recalls how people would try to become his friend just to get a table.

And would he? Don’t be daft. His thought it was ‘pathetic’ but concedes that at its peak it was unique in the restaurant world with more power brokers and celebrities in one room than you could shake a stick at. He thinks it’s doing ok now but the glory days are gone. ‘It’s more competitive at that end now’ and there are no regrets about selling it in 2005. According to Johnson ‘Corbin and King took the best staff with them anyway.’

So what’s more interesting the one offs or building the chain?  He reckons branded chains make more money but for a £30 a head occasion would rather head off to an independent. ‘There are good food chains – mostly mine’ but the difficulty lies in keeping up consistent standards when the owner is absent.  The beauty of restaurants like Strada and Pizza Express is that they provide a minimum level of quality that is the same everywhere. Same for Patisserie Valerie.

Ah yes, bread and cakes. I feel a trend coming on.  Johnson likes bakeries although he claims not to be systematically investing in them and to do no customer surveys or focus groups on them. He has lots in his portfolio though including the Gails chain and Patisserie Valerie and thinks that what makes them distinctive is the vertical integration whereby they produce all that they sell.

And is that a trend? Don’t get him to try and predict. A gut feel through experience maybe but he thinks it is ‘phoney’ to say investing is any more  scientific than that. In fact he wishes he was clever enough to see trends coming – it’s all so much clearer with hindsight.

And what does hindsight tell him about his own retail career? That launching the Belgo chain in NY ‘did his brains in’ and lost loads of cash. And also that buying Borders Books was a bad call as it was ‘headed for the graveyard’. Actually the retail graveyard might be a crowded place according to Johnson. Borders failed partly because of the competition from eBooks, Amazon and supermarkets. He cites  video rentals, greeting cards, games and travel agents as more possible victims. The future is online and multi channel only.

What! No more shops! Not quite. But Johnson thinks the UK is over supplied with shops. In years to come he reckons bricks and mortar will be showrooms while the real business of buying and selling will be online. If he was starting out now that is what he would get into. Or he might buy Tesco.

Crikey, does anyone know yet? Calm down, he’s not really going to do it. But he finds it effective and clever although aspects of it irritate like the world domination and blandness. For a retail behemoth it is quite quick moving and ‘you’ve got to be envious of its power and resources.’

Hmm, not sure even Risk Capital Partners has got that much money. What else is interesting?  He is liking the Draft House (a craft beer and British food chain) and has invested. Johnson thinks it links directly into the renaissance of food and drink with provenance – coffee and chocolate being two other examples. ‘Customers like the story’ he says. And then there’s his liking for raw fish.

You’ve lost me: Feng Sushi – he bought a majority holding in it in 2010, just after doing the same at Ego Group. He’s got fingers in so many pies it’s not true but there’s just something about selling us food which hooks him in time and again. Partly this is the deal flow he gets because people know he has done business here before. But he says that food is a high gross margin business, more competitive than most’ and that might just be what he likes best.

Ah, the thrill of the chase?  He certainly thinks the world is a lot more competitive now. Profits have been affected by all sorts of things including the minimum wage and rents. The customers are more demanding, there is better management around and blooming technology to deal with too. But despite all this…

Let me guess. Still better than wielding a stethoscope all day: Definitely. 

Spitalfields - from strip-joints to hip joints

As recent as the 1990s walking around the area near Spitalfields Market and Shoreditch after work involved being propositioned by prostitutes and the pubs in the area invariably supplied a basic cocktail of lager, peanuts and strippers.

Spitalfields as it was.

As for shops. There weren't any. Fast forward to today and its blindingly obvious that the area has been through a revolution. Highlighting this massive change to the infrastructure of this area just east of the City of London is a publication that has come across the desk of Retailinsider.com.

'Capital Watch' from Cushman & Wakefield lists the new 'hot spots' in London where record rentals are being recorded as national and international brands fight for exposure on the best streets. Previously, 'best' simply meant the obvious roads - Sloane Street, Bond Street, and Oxford Street etcetera.

But not any more as these traditional West End areas have been joined by newcomers Brompton Cross and most interestingly Shoreditch (with the Spitalfields complex the jewel in its crown). This part of town has also received a boost from pop-up mall Boxpark (as recently featured in Retailinsider.com) planting itself nearby.

Cushman & Wakefield are now in the process of further revitalising the tenant mix to Spitalfields Market, which includes bringing in the likes of NW3 and Mischa Barton's new label, that have helped push the Zone A level from £125 to £200 over the past 18 months.

I thought it was already a relatively high-falutin mix. But clearly not. Although it is a world away from the mix of even a handful of years ago (when it underwent re-development) in those days it was very much a laid-back space packed with independents.

Spitalfields as it is.

Many of those businesses sadly disappeared to be replaced with more professional operators - including some well know names. But now it seems the continuation of this evolution is for these names to be replaced over time with brands that are maybe not overly well known but are still backed by chunky money and are looking for fashionable locations with a touch of edge - but not too edgy.

As a single-owner space Spitalfields has the advantage of its tenants being managed in a much more holistic way than most other shopping locations - think along the lines of Marylebone High Street - which ensures there is a healthy mix of operators.

It has to be hoped that this mix still involves an independent element as it would be a great shame for the market and the surrounding area to go too far down the overtly-branded (fashion-focused) route - which is undoubtedly where some big money exists.

Regardless of what happens from this point on, the area is unrecognisable from the less than salubrious environment it was a few years back when the likes of Mischa Barton and NW3 wouldn't have been seen dead in this part of London E1.

Movers & Shakers Q&A with Jonathan Wall of Shop Direct Group

Brought to you by Retailinsider.com and K3 Retail

Jonathan Wall, Group e-commerce Director at Shop Direct Group

1. What is the greatest opportunity for your business?
We definitely see mobile as our greatest opportunity and, more specifically, using it to gain market share from other retailers by being connected 24/7 with our customers – especially while they’re browsing the high street.

2. What is the biggest challenge to your business?
The greatest challenge has to be high street retailers increasingly using mobile to improve their multi-channel offerings – particularly in-store. Having said that, as an online retailer, we see mobile far more as an opportunity than a threat.

3. With the benefit of hindsight what would you have done differently so far?
As a business, we’d have moved into mobile 12 months earlier if we had our time again. Personally, I’d have listened a bit more intently in 2005 when my previous CEO at dabs.com, David Atherton, predicted the boom in mobile retail!

4. What is the future of the physical store?
Ultimately, it has to be as the showroom of a connected world and the collection point for online.

5. What will the high street look like in a decade?
We see it being fully connected with a substantial social element. Land Securities’ recent agreements to put Wi-Fi into all of its shopping centres and to host Amazon Lockers show the future destination of the high street most emphatically. I predict that we’ll also see shopping become more of an experience, with a greater number of pop-up shops and other gimmicks.

6. Will mobile devices be the primary sales channel in the future?
Mobile will continue to be important for the foreseeable future as one of a variety of devices, as people gradually become connected 24/7 in a host of different ways and on differing types of devices.

7. What other retail business do you admire?
Amazon definitely gives us something to strive for – it’s basically Google’s checkout and the recent advance into web services has been really interesting to watch. The team there always seems to be ahead of the curve and unafraid to learn from their mistakes.

8. If you hadn’t been a retailer what would you have liked to do?
Photography was my first choice of career path. Knowing what we know now, I’d have pursued it, combined that knowledge with online, invented Instagram and retired!

9. What marks out of 10 do you give yourself so far for achievement?
I’ve always thought that I’ve been in the right place at the right time in terms of being in e-commerce from the start, which has helped my achievements somewhat! So when I say nine out of 10, I say that with the firm realisation that any success I’ve had has been inextricably interlinked with the success of e-commerce over the last 15 years.

10. Who would you place in the Top 30 Multi-channel/e-commerce Movers & Shakers?
I’m fortunate to be on the Movers & Shakers Advisory Panel so have added my views to the list. Having said that, there’s definitely room for Shop Direct’s Group Retail Director (and my boss), Gareth Jones!

DFS and Morrison's crank-up vertical integration

My grandparents lived in a village on the outskirts of Doncaster called Carcroft, which is where the 40-plus year-old DFS was founded and is still based.

Made in Doncaster.

I can recall a school trip to the factory where its founder Lord Kirkham (it was just Graham in those days) proudly explained how the sofas were made on-site. From that early period in the company’s history I also remember the ongoing joke about the DFS TV adverts and the company’s never-ending Sale.

They would promote the ‘Last Days’ of one Sale, only for another Sale variant to turn up on our screens the very next day. Well after many years the furniture group has decided to scrap its strategy of advertising its seemingly endless promotions and has instead shifted the focus of its media spend on highlighting its manufacturing credentials.

After all these years it still continues to make sofas in Yorkshire – as well as in factories in nearby Nottingham – and has in fact boosted the level of UK production from 20% to 30% since Kirkham sold the business to private equity firm Advent in 2010.

And it now wants to shout about this. But doesn’t it seem rather strange to abandon a price-focused approach in the midst of a downturn when consumers are increasingly watching the pennies and big ticket retailers are under great pressure.

Not really. It could be a rather clever move because in these straitened times there is more of a preference among shoppers to buy goods that have a high perception of value. And British craftsman-made products still thankfully hold just such a place in people’s minds.

Increasing production levels within the UK is not unique to DFS as there is a broad shift being made in this direction – especially from the fashion chains that recognise the rationale for sourcing from overseas is not as strong as it was previously.

China: No longer home of the cheapest labour.

This is not only about benefiting from the reputation that the UK has for producing high quality goods, the move is also related to many other factors. For starters there is the rising cost of labour in many markets such as China, which has increased dramatically over recent years as these regions have become more affluent.

Secondly, the lead times between ordering goods and receiving them is so much longer than with UK-manufactured products. This reduces flexibility in the supply chain thereby limiting the ability to shift production from slow selling lines to more popular products.

This enables companies to tap into the growing trend for constantly changing inventories as customers are increasingly demanding new products, up to the minute innovations, and fashion-led merchandise.

DFS can take advantage of this because it is not just selling UK manufactured goods but, as already mentioned, it is actually making them in its own factories. It can therefore dramatically shorten lead times by controlling a great chunk of the supply chain including the design and production process. Probably the only bit it does not control is the rearing of the cattle for the hides it uses on its leather sofas!

This fits very well with consumers’ growing concerns over provenance, which is driving the move towards the vertically integrated model. Just down the road from DFS’ HQ is Morrison’s supermarket that has long recognised the benefits of owning the whole production and retail process.

Unlike the sofa retailer Morrison’s does actually rear a modest number of cattle on its farm in Scotland. What chance of a partnership between the two Yorkshire giants in the future, which would really enable DFS to shout about its UK manufacturing credentials. 

This column was originally published in Kbbreview.

Postscript - I have since found that the hides from Morrison's cattle are used for the interiors of Aston Martin cars. 

Innovative Retailers - Boxpark

Brought to you by Retailinsider.com and PCMS

The Name: Boxpark

The Place: Bethnal Green Road, London E1

The Story: Take the man behind the fashion brand Boxfresh and let him loose with 60 empty shipping containers. Offer brand owners short-term leases instead of the usual mammoth tie-ins and watch as they trip over themselves to use your retail space.

Roger Wade: Could be parking boxes near you.

This thing with shipping containers – what’s that all about? Well, Roger Wade the founder of Boxpak has always equated a shipping container with success. While with Boxfresh he would watch big companies shipping out their stock in vast metal boxes and a fascination was born. This turned into an economical love affair when he customized a shipping container to take to trade shows. Fed up with spending lots of money on silly flimsy booths, he used to rock up with his container in tow and then just whisk it away afterwards. Lovely.

I bet the trade show people loved that. Couldn’t say but Boxfresh soon took it all a stage further. Given the cost of shop fit outs Wade also got a bit narked whenever an under-performing store was closed down and another one opened up in a better location. All that money straight down the drain and another refit required.

I see where this is going …. Ha, ha, he thought. I want a shop I can just move to another place if it is not working out where it is. But in 2005 Wade sold Boxfresh and assumed he was going to retire to the land of consultancy.

Sounds restful. But wait, he started to see other container store ideas and thought darn, I missed the boat on my own idea. So he jumped in at the deep end with the idea of a whole shopping area made out of shipping containers. And in 2011 the world’s first ever pop-up mall opened. 40 containers downstairs, and 20 upstairs where the food/café units are.

All this coming and going - is there an issue with rates here? Don’t bring me problems, bring me solutions. For your information Boxpark were welcomed with open arms by the regeneration teams in both Hackney Council and Tower Hamlets who have been delighted that a redundant bit of high street has been given a new life. They qualify for small business rate relief and Boxpark will be there for five years.

No high street retailers welcome here.

OK, so who is it for? Right, Boxpark and Wade are not interested in the tourists who want to gawp at the container structure. The mall is primarily there for the people who live and work in Shoreditch, secondly for people visiting the markets already there. It sells from a big range of different companies but the unifying concept is that they are all independent brands. There was a lot of interest from high street retailers but they were all ‘politely declined’. There are no vertical operations here, just wholesaling brands.

That sounds like a sort of local, ethical sort of thing? That’s certainly in the mix but vast money churning brands like Nike and Puma are there too which no doubt surprised some. Wade is not happy that ‘every high street is becoming the same high street’ and bemoans the fact that small brands don’t have the money to get on to the high street in the first place. Boxpark offers very short term leases whereas most normal developments require strong financial covenants and great long rental terms.

But I still don’t understand what Nike is doing there? All the brands there are doing something unique to Boxpark. For instance the unit Nike has taken is the only NIKE + Fuel Store in Europe. Diesel has a unit but it is the only UK outlet of their FiftyFive DSL sub-brand. Puma has launched their TWENTYONE concept store there. There are only 21 styles of footwear on sale at any one time and every 21 days it all gets changed around.

OK. OK. I get it. Er.. why 21 just out of interest? It’s their unit number.

Silly question. So what does Roger Wade actually see himself as now? ‘An ex-retailer and creative entrepreneur’. Boxpark is more of a department store in his thinking than a mall and he does not look to other malls for inspiration and innovation - although he likes them to be there to provide a counterpoint.

And the most important question of all – how is it trading? Well, Boxpark is not immune to tough conditions but it is fully-let and lots more brands want to get in on the act.  As Wade says ‘this is version one and the future will be even better’. And part of that future will be an embracement of new technology which is where Mr Charles Dunstone comes in.

He does? Oh yes. Dunstone is the non executive chairman of Boxpark and from the very beginning was a significant private investor in the business. Wade took him down to Shoreditch when the whole thing was just a building site and apparently he could ‘smell the DNA’ of the thing immediately.

And what of the brave new world of Boxpark in the future? Wade thinks the idea definitely has legs. He has been approached by a whole host of international agencies expressing interest. In fact he says a week doesn’t go by when he doesn’t give a tour to some continental contingent. But in concrete terms Spring 2013 is the launch date for Boxpark Amsterdam and probably another UK ‘much bigger and larger’ unit.

You know what I am going to ask now? Yes, and I can’t tell you because it’s all top secret. Just wait and see where it will be located – wherever it is chances are you won’t be able to miss it.

PCMS Group is a leading independent supplier of software and services to the retail industry; PCMS Store and Multi-channel solutions have been chosen by over 98 retailers including Arcadia, John Lewis and M&S. 

Guest Slot - Analysis Insider - Sarah Wilson

Fast-forward five years from now and the question being asked about pure play retailers will be how exactly do they survive without taking advantage of trading across multiple channels including physical stores?

Having no stores will be seen as a mistake.

Shoppers will find it rather strange that they can only buy from them online and not have the opportunity to also go into a store and experience the brand along with feeling the goods. The reality for retailers is that they surely have to maximise every opportunity and for this they need to utilise all the channels they can get their hands on.

In the same way that bricks and mortar retailers have fought back against online-only operators by developing e-commerce arms, our view is that online retailers will want to use bricks to give their brands that vital visibility.

The high street feeds our desire for retail therapy in a way that cannot be replicated in the virtual world. The convenience of the store experience is key to generating impulse purchases, which is very difficult to achieve online. Online brands simply cannot give their customers that same sense of satisfaction and reassurance that the physical outlet can provide.

High Street retailers are feeding this need for convenience, ironically using the very technology that threatened to sideline them a few years ago.  Smart-phone and tablet technologies are already starting to entice shoppers into stores, a trend which is set to continue, making it easier high street merchants to really compete with their pure play rivals.

Shops open up a new customer base.

The pure plays are also facing the pressure of needing to put themselves in front of more potential customers. They have a finite number put in front of them – chiefly through mail-outs and catalogues – and so the high street provides them with a great way to connect with a new set of shoppers. It is possible that without this High Street presence, their  online sales will plateau.

Not surprisingly, against this backdrop, there are already indications that the more progressive internet players are making moves into the physical space. Amazon for one has introduced city centre lockers as collection points for deliveries.

There are also rumours that Amazon, along with Google, is taking it a step further and looking at opening shops. If these successful operators are considering such moves then you have to reckon there is plenty of mileage in it. Online cycle retailer, Wiggle, and fashion site Net-a-Porter clearly think so as both companies have stated their plans to open outlets to complement their online operations. They join N. Brown that has moved its catalogue brand Simply Be store onto the high street.

Others have been experimenting with the physical space by opening pop-ups. EBay took this route late last year along with others like Supermarket Sarah that popped up in Selfridges store in London. Such moves could also provide a solution to those store retailers wondering how to squeeze some value from their unwanted square footage.

What we are witnessing is the evolution of retail, with traditional retailers going online and the internet operators going the other way on to the high street. Just as the former have faced great challenges adapting to the online medium, the pure plays will undoubtedly find their move into a new space equally hard as they shift into the world of bricks and mortar and all the complications that entails.

The real winners from this switchover will be those retailers that best deliver on the multi-channel model. It’s not about treating channels as add-ons. It is instead about an integrated experience for customers as they choose to shop across channels and increasingly look on pure plays as employing yesterday’s model.

Sponsored column by Sarah Wilson, retail specialist at consultancy Egremont Group

Guest Slot – Recruitment Insider-Nigel Sapsed

We all know that the retail sector is having a hard time – you cannot open a newspaper without reading about yet another merchant bringing the shutters down for the final time or at best reducing the size of its portfolio of stores.

Little good news for retail in the newspapers. 

But just think how bad things would be if retailers were as far behind the times as businesses in the leisure industry – where there has been only a minor understanding of the environments in which they trade. This has in turn led to many operational deficiencies including the limited adoption of digital technologies.

Retailers are arguably light years ahead of their leisure and hospitality counterparts. They are adapting their business models to the inevitable multi-channel future and have for many years recognised the value of employing people in a trading function whose role encompasses the management of both margins and sales.

In contrast, the hospitality industry does not have a widely recognised role that ties these two crucial elements together. Typically the operations people look after sales and service while the margins end of things is handled by marketing.

It’s a rather perverse situation because retailers have long since recognised the need for having trading directors, and also increasingly in this multi-channel world, e-commerce directors who are specially focused on making money on the assets within the business.

They are tasked with continuously looking at ways in which they can be smarter with how they squeeze more sales and profitability from their businesses. Nobody has really thought about implementing this trading-mentality approach in hospitality.

The industry tends to still operate within silos whereby you let hoteliers do their job and let publicans do their job – and within large multi-discipline groups it is fair to say that the rule is that ‘never the twain shall meet’.

But finally the industry is beginning to look at the retail sector and admit that they do a much better job and that there is therefore something there that the hospitality industry can learn from.

Whitbread: Has smelt the coffee.

Take Whitbread and its Restaurants division. It is taking a progressive approach by identifying the need to have a specialist trader on its board and allowing this individual to operate beyond a single brand/service/environment within the business.

The company’s managing director spotted the potential to add real value by having a specialist trader focused on pulling operations, HR, marketing, and finance together and driving meaningful money-making strategies.

For example, this could be about stocking regional beers in different clusters of Whitbread’s pubs. This would impact on various parts of the business and it would be up to the trader to bring together these unconnected disciplines and deliver the initiative as a profitable ongoing activity.

Whitbread is also adapting other parts of its business to take into account the fundamental changes taking place around it in the wider world. Like the retail industry it is coming to terms with the impact that digital technologies are having on businesses in all sectors.

It has seen the likes of Jessops react to these changes by skilling-up through its recent recruitment of a trading director to its board who brings significant digital skills from his previous role at The Carphone Warehouse.

Whitbread’s Premier Inn division is taking similar steps by boosting its digital capabilities by appointing a new marketing director from Lastminute.com who brings broad-based marketing expertise including brand, consumer and digital skills.

The company has recognised that a greater percentage of its sales are accruing through its website and that this is only likely to grow over time – and it has chosen to do something pro-active about it.

Let’s see if other operators in the leisure and hospitality industry final wise up to the big-time threats and challenges out there and follow suit in changing their models to operate in today’s and tomorrow’s  worlds rather than that of yesteryear.

Sponsored column by Nigel Sapsed, director of executive search specialist Sapsed Stevens

Retail Species - The founder - Nick Wheeler of Charles Tyrwhitt

The Person: Nick Wheeler

The Company: Charles Tyrwhitt

The Job Title: Founder and Owner

Some people start making money seriously early don’t they? Certainly do. The young Wheeler was a mere student in arms when he set up shirt maker and clothing retailer Charles Tyrwhitt in 1986. In fact he had no choice but to found a mail order business as sales conducted by telephone would have interrupted his lectures. And from these beginnings it now has sales of nearly £80m.

Wowzer. And he’s still in charge of it all? Yup. He’s on record as saying he would never sell the business on the grounds that you end up with a piddly 5% and then get sacked. Plus he likes the fact his middle names are on people’s collars.

I don’t follow. Charles Tyrwhitt are the middle names of Mr Nick Wheeler Esq. And I am going to help you out here by telling you that you pronounce it ‘tirrit’. That’s on the website so lots of people must have trouble with it.

Obviously I knew that already. The website also has a useful section on Five Ways to Fold a Pocket Handkerchief. And if you don’t know your Twill weave from you Imperial Oxford then it will tell you that too.

Good. But he’s not really going to get sacked is he? Course not, but he says his MD is better than himself. And even when he gets home the retail rivalry doesn’t stop. His wife Chrissie Rucker runs The White Company with £120 million of sales just in the UK. He says that she will launch overseas when the time is right – unlike Charles Tyrwhitt.

Meaning? Meaning that they did it too early in his opinion. They launched mail order in Germany and US and it was not good. And while we are focusing on the negative they nearly went bust in 1994 and again in 2007.

Well there’s honesty for you. There’s more. TM Lewin, Wheeler feels, focused on the UK and now has 112 stores as a result whereas he ‘fiddled about’ abroad. Although he concedes his company is doing very well now.  They have just made it onto the Sunday Times Profit Track 100 League Table with a profit jump from £2.6 million in 2008 to £9.5 million in 2011.

Yes, this public school self-deprecating thing, does he do it all the time? Quite a bit. But he does admit to being ‘good with data’. And he was pretty shrewd to open his first shop on the home of men’s haberdashery Jermyn Street in London. That gave Charles Tyrwhitt credibility and Wheeler was also right on the money with the internet – setting up in 1998 because the internet was ‘perfect for our business’. In fact in a Utopian world they would drop catalogues like a shot.

Why’s that? Because they send out 800k every three weeks and that’s a lot of money. So every month he runs tests on who they can drop from the catalogue mailing list. Bizarrely Wheelers says the company is having to dampen demand and concentrate on more profitable sales but back in the early days he was too optimistic and they never hit a target.

Here we go again. OK, I’ll just tell you about the two busts and then I promise we can go back to happy land. In 1994 everyone thought they were invincible. Charles Tyrwhitt bought a children’s wear retail business. And they lost more on that in three months than in as many years of gentlemen’s shirt retailing. Then in 2007 they began with women’s wear and ended with £9 million of stock that did not sell. A covenant was breached with RBS and the rest was nearly history.

Jermyn Street: the heart of shirt-land.

So the moral is? The moral is that he learnt his lesson. And now his focus is on being the best shirtmaker. A long time ago all the shirts were manufactured in Clacton by the top shirtmaker in the country but now the gloves are off and it’s 4 shirts for £100 on Jermyn Street  so they are made in places such as Peru, Egypt, Romania, and Vietnam. But he’s not in the business of screwing over suppliers, in fact he wants everyone to love his company and personally chats for 30 minutes to new starters so that they see it as their own too. His email is on the website and customers are free to contact him. He’s that kinda guy.

Phew that’s a big inbox. Talking of customers who and where are they? 75% of the business is online or mail order with the consequent small capital expenditure. As he says ‘the wonderful thing about mail order is you get sales before you’ve even paid for the catalogue.’ 55% of sales are outside the UK and he has been quoted as saying that his US customers are younger than his European ones, which bodes well for that market.

So if TM Lewin did so well with their store numbers what’s his thinking on his own? Charles Tyrwhitt has a 36-month payback on stores and Wheeler wants them to be there for 70 years. Currently they open four per year and there are 16 in the UK and internationally three stores in the US and one in Paris. He won’t put a number on the total number of stores because ‘who knows how many stores we need’ but it could probably be up to 30 in the UK and possibly the same in the US.

Is he happy with the footfall through the doors? There are 365,000 new customers per year, mainly through the stores and one thing Mr Wheeler is happy with is that they know where they are coming from and which channels they are buying through. It’s that data thing again.

And what does the data say about that bane of the home delivery industry – the level of returns? Well now, this is interesting. Only 2% of men’s shirts are returned – a tiny amount considering this is the biggest selling sector of the company. But 22% of women’s clothing is sent back even though it is a tiny part of the deal.

That’s got to be keeping him awake at night? You’ll have to ask Mrs Wheeler. But certainly he says he ‘is in favour of cutting choice’ – the company currently has 400 SKUs and it looks like women’s wear might be the place to start wielding the knife.