Down to earth”, “genuine” and “grounded” have become almost clichés when they are trotted out to convey just how normal and nice multi-millionaire entrepreneurs are. “Philanthropist” and “family man” are others. Yet it is hard not to use them all when describing Carpetright chairman and chief executive Lord Harris of Peckham.
Even in the opulent Hotel Hermitage, slap bang in the centre of the rich man’s playground of Monte Carlo, this is evident. Lord Harris is in Monaco for the judging process and awards of the Ernst & Young World Entrepreneur of the Year. He was picked from hundreds of UK hopefuls to be one of 43 finalists from across the globe. And, despite his 50 years in business, building two successful retail companies and winning a peerage, he appears genuinely surprised and delighted that his successes are being acknowledged on a world stage.
It is impossible to detect even the smallest hint of cynicism or calculation when he humbly says: “I’m very, very excited. And very honoured as well. I think you are always surprised and it’s a great honour to represent England.”
A true UK retail pioneer, Lord Harris started his career at the age of 15 by taking over the family business in London – two carpet shops in Peckham and another in Penge – when his father died. Hard work took the business to 1,700 stores at its peak. It became Harris Queensway and at one point had the Hamleys, Poundstretcher, Queensway and Ultimate Electrics brands, among others, under its umbrella.
While others would have retired after selling Harris Queensway for£450 million in 1988, Lord Harris launched Carpetright and built it into what is now the biggest carpet retailer in Europe, with 600 shops in five countries.
But it is not just carpets that have brought him to Monaco. Lord Harris believes it is his philanthropic endeavours that count too. “It’s about the work I do with schools – 18,500 children go to schools that we sponsor,” he says.
A committed and long-standing Conservative supporter and donor, Lord Harris was asked in the mid-1980s by then Prime Minister Margaret Thatcher to sponsor a school in Croydon. Within a year, he helped increase the pass rate from 11 to 54 per cent. After three years, it was named the most improved school in the country.
The Harris Federation was set up in 1991 and now runs eight schools. It operates under a classic business model with a team including chief executive, finance director, personnel director and IT director overseeing operations, but also with the personal involvement of the entire Harris family.
Lord Harris describes his approach to turning around schools as “value for money”. And the powers-that-be agree. “The Government keeps giving us schools,” Harris says. The federation hopes to take one more in Croydon, another in Bexley Heath and one in East Ham – bringing the total to 11. However, he will stop at 12. “I only want 12, because I feel that’s a size you can run,” he says.
While at his most animated when describing his work with underperforming schools, Lord Harris acknowledges that none of it would be possible if he had not built a strong business first. “If you didn’t have the business, you wouldn’t be able to do the schools,” he says.
But just how safe is that business in the present climate? “I think we are going into recession and I think it’ll be as hard as 1974,” warns Lord Harris. And he should know, having survived four such downturns. “The market is very tough and it’ll be very difficult,” he forecasts.
A falling housing market makes home furnishings a vulnerable place to be, but Lord Harris believes such store groups are well-placed to recover before others in the retail sector. “What normally happens is that people don’t spend as much money on cars and holidays and spend more time in their homes. We come out of the recession before others and I think we are somewhere between six and 18 months off that – nearer 18 months,” he says.
However, Lord Harris is far from complacent. The carpet sector in the UK needs reviving and has done for some time. “If you look at the carpet market we’re in –£1.8 billion and it has not moved for 20 years,” he says.
Out of necessity, the UK carpet industry – led by Carpetright and, in particular, Lord Harris’s son, Carpetright buying and marketing director Martin Harris – will launch a nationwide marketing initiative in September. Using the straplines “Fifth wall” and “Fun on the floor”, the campaign aims to “get people’s minds on carpets instead of spending money on iPods and TVs” and “fetch colour back into carpets, because everything is beige at the moment,” Lord Harris explains.
Carpetright has put£1 million into the marketing pot and its suppliers have put in 0.4 per cent of their UK turnover. In theory, the result will be a bigger total carpet market in the UK and Carpetright’s 30 per cent market share will be worth more. “Whatever we do for the industry will help us,” explains Lord Harris.
Carpets may not be as sexy as flatscreen TVs, but he remains confident he still has a robust business, not least because of the chain’s growing strength on the Continent. “Carpetright is a good company, returns are high. We’ve got 13 per cent of the Dutch market, 10 per cent of Belgium and we’re expanding in Poland,” he says.
And a certain “very famous, very wealthy gentleman” agrees, says Lord Harris. Billionaire Bill Gates took a 3 per cent stake in Carpetright two weeks ago through his personal investment company Cascade Investment. He says he can’t go on the record about Gates taking a stake in the company, but is first to bring up the subject and is clearly enthralled by the prospect.
Ironically, though, if Lord Harris had got his way, Gates would have missed out. Lord Harris was forced to abandon plans to take the store group private last December when the credit crunch led to one bank pulling out at the last minute. He had several motives for trying to buy the business. He says: “When you are our size – which is big, but really not very big – you have to do all the same things as a top 100 company and it’s costly with non-executives and all those things. With a private company, you can take a lot of cost out.”
At its present value, Lord Harris says a takeover of the business now would be easy to achieve but he is adamant that taking Carpetright private is no longer on the agenda. His goal is simple. “We’ve got one ambition now and that’s to get top 100,” he says.
The failure to take the company private also scuppered his plans to make his son Martin’s succession to the Carpetright throne a certainty. “It would have been easier for Martin to take over. Of course, every father would like to see his son take over,” he admits. Harris has a genuine admiration for his son’s abilities. “I think he’s capable of taking over. I think he’d do a very good job, but it’s in the non-execs’ hands, not mine,” he says. “I think he wants to do it – I know he wants to.”
In the thick of it
Succession plans aside, at 66, Lord Harris shows no signs of stepping down. He will remain at the helm “as long as I’m well and as long as I enjoy it”, he maintains. “I’m quite well and I enjoy it.” Harris still works six days a week, spending his Saturdays walking the stores talking to customers and staff.
Harris is keen to remain in the thick of the action. He enthuses about the company’s new state-of-the-art warehouse at Purfleet in Essex. “You’ll be quite amazed by the warehouse – it’s the biggest in the world,” he says.
The site’s carpet-cutting facility will be at the heart of the flooring specialist’s expansion. It provides the retailer with the capacity to support doubled store numbers with only 40 more people. Mainland Europe is very much the focus for future expansion. Denmark is next, followed by “any cold countries in Europe”, according to Lord Harris.
Did he envisage the business ever growing on this scale? Upon taking over the family company, his ambition was to have 10 shops. But, in the end, that was not satisfying enough. “I couldn’t have been happy with it – when I got 10, I wanted 20; when I got 50, I wanted 100,” says the tycoon.
Taking over the family shops meant Lord Harris had to give up his ambition of becoming a footballer. But that aspiration has been to some extent satisfied by his role as a director at Arsenal. When his mobile rings during the interview he is apologetic, but can’t resist taking a call about two potential young signings – a 17-year-old from Cardiff and another from Marseille. He explains that the club spends millions on new players at this time of year. “Very, very exciting,” he says.
His ambition for Arsenal is to see them win the Champions League and the Premiership – a goal he believes they were exceptionally close to achieving last season. “We missed out on both this year – very narrowly, much more narrowly than people think,” he says. “In sport and business, you need to be lucky and we were slightly unlucky last year.”
And luck was not on Lord Harris’s side at the World Entrepreneur of the Year award. He lost out to the Swiss candidate – Dr Jean-Paul Clozel, founder of Actelion Pharmaceuticals. It was pioneering biotechnology and not carpets that ultimately won the plaudits of the judges in Monte Carlo. But Harris can take heart that a certain “very famous, very wealthy” entrepreneur has given him his vote of confidence.
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