For the second instalment of this year’s road trip, Retail Week heads to Lewes to visit family-run business Steamer Trading Cookshop, then Brighton and Chichester home to bedroom furniture specialist Feather & Black. Next is Guildford, where Snow+Rock is based. We then head to East Anglia to visit some very different businesses in Colchester, Ipswich and Cambridge.
It’s no surprise that the Southeast of England is in a healthier economic state than the rest of the UK. If not entirely recession-proof, its demographic mix and relative affluence have given retailers an easier ride than some regions covered in Retail Week’s annual road trip. Kevin Young, group head of marketing at retail group Snow+Rock, puts it simply: “The affluent Southeast is still the affluent Southeast.”
The Javelin Group’s recent white paper, Battlefield Britain, showed that some of the most robust retail locations are in the Southeast, from Bromley, Croydon and Guildford to Colchester and Bury St Edmunds. Only 6% of retail locations in the region were deemed ‘at risk’ by the report, compared with 67% in the Northeast.
But there are still challenges facing retailers in the area, and the mix of property portfolios, town centres and the independents-national multiples balance is constantly evolving. Our route takes in several towns within an hour-and-a-half train ride from London, initially heading south.
Lewes is a small town with a shopping population of only 16,000, but it has an attractive retail scene, with independents sitting alongside national brands such as Fat Face and White Stuff. It is also home to Steamer Trading, a family-run business that has steadily expanded. Its head office occupies a converted old malt store, part of the former South Downs Brewery. The old brewery building is now the retailer’s warehouse.
The chain of high-end specialist cookware shops was founded by Liz and David Phillips in the nearby village of Alfriston. Both had an illustrious background in the homewares, retail and design scene of the 1960s. David started his career in the 1950s with Finnish Designs, introducing some of the earliest examples of Scandinavian style to the UK, and eventually joined Terence Conran to become Habitat’s first buying director in 1966. Liz, meanwhile, was home editor of The Sunday Times.
That flair for design and retail has clearly been instilled in their son, Ben Phillips, who now runs the company. Since he took the reins in 2000, the business has added 26 stores, each in carefully picked locations and custom-designed with great attention to detail.
“I grew up with design,” says Ben Phillips. “The design side has been really important – that’s where the passion lies. I wouldn’t want to be running this business if it was about making money but with no consideration for what we were selling or how it was presented.”
As a family business, Steamer doesn’t have to bow to outside pressures to make particular levels of return, but the business makes money.
Expansion started locally. It was about “what we knew”, explains Phillips, with a cluster of shops opening in the Southeast, including in Brighton and Eastbourne, as well as Battle and Heathfield.
Net sales in 2011 were at £15.9m, with EBITDA at £3m. Stores range from about 7,000 sq ft in locations such as Guildford, Horsham and Chester, to the more typical size of about 2,000 sq ft. And the strategy of “gentle, measured growth”, as Phillips puts it, married with superior, specialist customer service, is paying off.
“We spent time thinking about where they should go and making the stores look attractive,” says Phillips. “You have some that perform better than others and some towns that have had a tough time, but we’ve never had to close one and never been tempted.”
Careful research into suitable locations is key to Steamer’s expansion, but “ultimately it comes down to instinct”, he adds. “You have to go to a town and walk it, look at it. It’s not only about understanding on paper who’s in that town but about whether it feels right for us, and I can see our customers there.”
For example, Steamer Trading caused a stir last year when it opened a store in Brentwood – of TV’s The Only Way is Essex fame. “We thought this is a really dull-looking town, but then you have a good look at it and you’re thinking, ‘look at these lovely houses, there are clearly people who are very proud of their houses and have quite a lot of money’,” says Phillips. “The customers are here, but the shops are not there to give them what they want.”
The opening was a resounding success and the store traded near capacity immediately. Gauging the mix of retailers in a certain location is an important bellwether for expansion, but “sometimes you have to be the first”, adds Phillips.
Last month, Steamer opened another store in Hampshire’s Lymington, and one in Dorchester will follow in six weeks, but the retailer is concentrating much of its remaining energies on the launch of its website later this month. Phillips is keen to take advantage of his customer data, and bring the online offering up to standard.
Only eight miles from Brighton, Lewes feels quite distinct from its neighbour, with a different customer mix. As Phillips puts it: “There’s a reason they’re in Lewes and not in Brighton. That’s why we opened shop number two in Lewes and three in Brighton – it’s different, and they did not cannibalise at all. Both will survive recession extremely well.”
Travelling those eight miles, Retail Week takes a quick tour of Brighton and its unique retail scene, from the quirky lifestyle shops in The Lanes to the big-name retailers of Churchill Square and Brighton Marina. With big brands sitting alongside independents – more than 70% of the city’s retail portfolio is made up of small and independent shops – the city of Brighton & Hove nonetheless faces retail challenges. The economic downturn led to a large turnover of retail businesses as shops such as Woolworths, Habitat and Borders all closed. And like so many retailers, Brighton’s stores also face growing competition from online players.
However, worth £307m to the local economy each year, Brighton & Hove’s retail industry is vital to the city, and the council recently released a scrutiny review report outlining some key priorities, ranging from parking to rents and signage.
The next stop is also a prime location for many specialist independent retailers: Chichester, where bedroom furniture specialist Feather & Black is based.
Founded by Adam Black and Robbie Feather in 2002, the company started out as CJ Furniture, a young “Heals-type brand”, as Black says. Having bought the Iron Bed Company in 2004, the duo decided to rebrand. “Our relations in Yorkshire said don’t put your names on the outside of the shop, whatever you do,” Black remembers. “But if your surname is Feather, and you go into bedrooms, it’s quite appropriate.”
Running the chain is Black’s second career – his family business was Peter Black, Marks & Spencer’s biggest non-food, non-clothing supplier. Black ran the importing side, but when it was bought in 2001 he decided to leave.
Setting up with childhood friend Feather, who eventually left the company in 2009, was the next step, although Black admits: “If I had my time again, I’d question whether the home sector was the cleverest one to go into, but that’s where the opportunity manifested itself.”
It is a tough market, with large warehousing expenses, high damage costs to product, high delivery costs, and no impulse purchases, admits Black. The casualties have been noticeable over the past four years, as retailers such as Allied Carpets, Habitat and Lombok hit trouble. “Probably about 20% of the supply has disappeared,” says Black.
Feather & Black was also hit at the start of the recession, when it experienced a quarter 30% down in sales on the previous year. However, the business is up about 85% over the past three years, according to Black, “so we’re doing something right”. Year to date, three-quarters through the finacial year, sales are up 3% like for like and 13% in total on the previous year.
Black puts the business’s strength down to a strong multichannel offering, as well as a keen focus on customer service.
“Customer service is going to become one of the biggest battlegrounds,” he says. “It’s going to be Darwinian. Poor people in my shops will lose their jobs, poor suppliers will stop supplying me and poor ranges will stop being bought. It will be brutal and the customer is going to become ever more powerful.”
Feather & Black has 35 stores across the UK but Black is in no doubt about the advantages of the Southeast. “Right now, if I opened another dozen stores, they would all be in the southeast,” he says. “The amount of money in London and the Southeast per capita and the density is so much higher.”
And when it comes to opening a store, location is still key. Feather & Black would open in Reigate, but not Croydon, in Bournemouth, but not Southampton, says Black, adding: “Just as was always the case in retail, the wrong side of the street works less well than the right side of the street.”
For one retailer, Guildford-based Snow + Rock, another’s wrong side of the street is right for it. Snow+Rock recently opened a tri-branded 14,000 sq ft store in Croydon. “Purley Way in Croydon is a big destination shopping place,” explains group marketing director Kevin Young, who has been at Snow+Rock since 1995. “It’s tried and tested, and is a good location for southeast London, and Kent and Sussex too.”
Snow+Rock now includes the original winter sports and outdoors brand as well as Cycle Surgery – acquired in 2007 – and Runners Need, added to the portfolio in2010.
The retailer, which celebrates its 30th anniversary this year, was founded by outdoor enthusiast Mike Browne. In 2004, he sold it to entrepreneur Andrew Brownsword, who presided over expansion and the acquisition of Cycle Surgery. In 2010, the retailer changed hands again, in a management buyout, but Brownsword still remains a significant shareholder.
Many at the top of management have been with the company for a number of years. Current managing director Dion Taylor is the most long-serving, with 20 years under his belt.
Despite myriad changes, the ethos of specialist customer service, provided by outdoor experts – some of whom have climbed Everest or reached the South Pole – endures to this day.
“We’ve always tried to be specialist in our retail. We are a premium player in the outdoor and winter sport market, and we haven’t changed from that since day one,” says Young.
The acquisition of the running and cycle brands was at the heart of a strategy to become less dependent on seasonality and take advantage of back-office and supply-chain capacity throughout the year. Runners Need and Cycle Surgery are now also driving expansion, with a particular focus on the commuter towns surrounding London, says Young.
Another focus is the rise of multichannel. Young admits that the retailer has been “slightly behind the curve” in terms of its online businesses, but it is catching up. It recently appointed David Kohn as head of multichannel, and has done much to leverage online marketing.
While online represented the equivalent of its seventh biggest store a year ago, the retailer expects it to be number one by next year, according to Young. “The real challenge is to integrate the web into the shops,” he says, and Projects in the pipeline include the roll-out of click-and-collect in Cycle Surgery.
However, bricks will always be integral to the business. “We do take a lot of comfort in the fact that a lot of the things we sell are quite touchy-feely and require fitting and a physical presence,” says Young. Taylor adds: “We’re still committed to being a bricks-and-mortar retailer. A lot of what we sell is aspirational. One of the hallmarks of our business is to employ end-users that can show empathy towards customers.”
Customer experience and service was extolled by all retailers encountered on our road trip, and is repeated northeast of London. Many of the towns of Essex and East Anglia have a different demographic from their southern counterparts, but they have also drawn investment over the past few years.
In Colchester, the Fenwick-owned Williams & Griffin department store revealed plans for a £30m transformation last month. The proposals form part of Colchester Borough Council’s wider strategy for investment in, and regeneration of, the town centre over the long term. They will also make the store much easier to navigate and increase its size by almost 50% to 85,000 sq ft, with a much wider assortment of brands and two new restaurants.
Other developments include new shopping centres, such as the Grand Arcade in Cambridge (see box), as well as ambitious schemes that include housing, offices and shopping, such as the CB1 Cambridge station redevelopment, which seemed well under way when Retail Week arrived in town.
East of England Co-operative
Further east, East Anglia’s biggest retailer, the East of England Co-operative Society, is also investing. In its current incarnation it was formed from a merger between two societies in 2005, Ipswich and Norwich and Colchester and East Essex. It has more than 130 food stores, ranging from 16,000 sq ft supermarkets to 3,000 convenience stores, and employs 4,700 staff across a family of businesses, which includes funeral homes and pharmacies, making transactions per week about 850,000. The retailer is investing about £6m across the business on IT, and there’s a total of £22m earmarked overall for investment including refurbishment.
The co-operative movement in the region started in 1868, according to Roger Grosvenor, executive offer of retail at the East of England Co-op, who has been with the retailer for 40 years.
One of its strongest-performing locations is Ipswich, where it has 40 food units within 10 miles. In fact, it is an Ipswich postcode that holds the top spot for the highest density of co-operative members in the UK.
Retail Week visited the East of England Co-op at its head offices in Wherstead that include a Grade II-listed Georgian manor, which the co-operative lets for functions – just one of its diverse business arms. The Co-op is a cash-rich business, says Grosvenor, with assets worth £240m, and one of its core strengths lies in its extensive property portfolio.
One of the most acute challenges to the retailer is the advance of national multiples over the past few years, especially Tesco. “Tesco is everywhere,” says Grosvenor. “It’s moving into market towns where we’ve had our strongholds. But they are still our strongholds, and we’re fighting Tesco.” Grosvenor has recently taken Tesco to judicial review over its move into Manningtree, for example.
Because of such competition, the company’s USP of ‘localness’ is increasingly important. The retailer is aware of its responsibilities towards its members, customers and local communities. “The focus for us is balancing our commercial awareness and our social responsibility. It’s beyond just pure business,” says Grosvenor. “We’re very keen on localness. Every pound spent within the business gets recycled five times within the region – every pound spent with the multinationals gets recycled once.”
Part of the support to the local community is driven through the retailer’s local sourcing arm. Over the past three years, it put more than £15m into the regional economy. The co-operative also recently launched a Dragons’ Den-style investment fund for local businesses, which has already attracted a number of applications.
In the 2011/12 financial year, East of England Co-op’s turnover was £353.3m, and profits before tax at £11.7m, compared with £8.8m the previous year. The retailer has had to deal with the challenges of the wider economic climate, and has undergone a major repositioning to emphasise its value message.
It is also trying to reshape its business, says Grosvenor. “We have got strong retail and strong property, but we want something else to diversify even more.”
The immediate future holds new store openings and plans to provide a locker service for click-and-collect. “We’ve not been shy to make changes,” Grosvenor points out. It looks as if there are more to come.
The Southeast gave a sense of the importance of regional know-how. Retail might revolve around London geographically, but retailers show a keen consideration for local quirks, as well as the ability to spot unique business opportunities – and how to scale them beyond the affluent South.
A tale of three malls
Shopping centres liberally dot the Southeast, with mega malls and in-town centres vying for lucrative catchment areas across the region. Here, three shopping centre developers and investors share an impression of the area they occupy – and those they are looking to move into.
It’s been nearly a year since the largest urban mall in Europe, Westfield Stratford City, opened its doors, and according to Westfield director of development John Burton, the first nine months have beaten expectations. “Not a week has gone by where our forecasts haven’t been heavily exceeded,” he says. With nearly 800,000 visitors a week, the development clearly met a previously unsatisfied demand in east London, and it is now 100% occupied in time for the Olympic Games. The next location on Westfield’s radar in the UK is Croydon, and the developer has recently presented detailed plans for a scheme.
Fund manager Hermes has invested steadily in smaller, in-town shopping centres.
The group bought out Westfield from its joint-venture shopping centres The Friary in Guildford, CastleCourt in Belfast and Royal Victoria Place in Tunbridge Wells earlier this year. Retail Week visited The Friary, which underwent a £40m redevelopment last year. According to Ben Tolhurst, Hermes’ asset manager for The Friary, Guildford is “probably the most under-shopped town in the UK, when you look at the potential of the catchment and total spend available, compared with actual retail floor space”. Developments such as The Friary are vital, and over the past 12 months it has moved from the middle to the more premium end of the market.
Cambridge Grand Arcade
The USS-owned Cambridge Grand Arcade development opened in 2008, the first major scheme in Cambridge for more than 30 years. According to centre manager John O’Shea, footfall at the 450,000 sq ft scheme has increased year on year, as has turnover, with double-digit growth last year. Success was down to a strong letting strategy. Anchored by John Lewis, the development also attracted retailers such as Apple, Hollister, Russell & Bromley and Rigby & Peller – all new to the city. There was also a strong focus on the right balance of high street and high fashion. A big student population and lots of visitors are an important part of the demographic, as well as local residents, O’Shea points out. “We’ve managed to develop a retail mix that perfectly matches that demographic,” he says.
Cambridge Wine Merchants
Occupying prime real estate on Cambridge’s King’s Parade, Cambridge Wine Merchants is a great example of the city’s varied retail scene.
The specialist spirits and wine merchant was founded by Hal Wilson and Brett Turner in the trough of the 1993 recession. After graduating from university, Wilson was working at a failing wine retailer, and when it closed down overnight he applied to take on the lease at the Cambridge store. A sympathetic bank manager made it possible. “I got the retail bug, and the wine bug,” he remembers. “I was 24 and wanted to get my teeth into a business.”
Opening a wine merchant in a recession might have been a risk, admits Wilson. “I was probably extremely blinkered about it, but
I knew locally there was a good market. There were no other independent wine merchants in Cambridge – they had all been cleaned out a few years earlier.
That always seemed a shame.
This is a great wine city; underneath our feet are cellars full of the most excellent and well-chosen wines, by experts who are now customers as well.”
The business evolved organically, as its two founders ploughed profits back in to it. They opened another shop within a year, but the number of stores remained the same for a further nine years, with the emphasis instead on building contacts with customers, wine growers, and the agents, importers and others in between. The retailer now has four stores around Cambridge, with three franchises in Royston, Ampthill and Salisbury and a head office and warehouse in the Cambridgeshire countryside. Last year, turnover rose 16% and it is currently heading towards £5m this year. The founding combination of business acumen and a passion for wine is still apparent. “We’re trying to do both,” says Wilson. “The guiding principle
is still how to offer really good product, a range of services, excellent customer service and good value. There’s no point in being an expensive bottle shop. We’ve always wanted to be able to buy in such a way that we’re offering something different but also affordable.”
In addition to potential expansion, Cambridge Wine Merchants has branched out into other services.
It successfully leverages its expertise through consultancy to larger brands and companies and has become a leading educator in the drinks field, as a certified Wine & Spirit Education Trust course provider.
Success as a retailer is about “constant innovation”, Wilson believes. “We’ve had lots of ideas – some might never come to anything, but it’s important to have idea generation. You don’t have to be expanding madly, but you can be doing things better than the competition.”
- Next week Tiffany Holland heads to Scotland. Click here to view previous reports.