21 years after he was Retail Week’s first interviewee, Sir Terence Conran tells Tim Danaher why today’s retailers need to develop a passion for product

A big interview sets the tone for a magazine launch. And 21 years ago, when the pilot edition of Retail Week was being put together, interviewees didn’t come much bigger than Sir Terence Conran. Through his Storehouse empire, he controlled brands from Bhs to Habitat, Mothercare to Heal’s.

Two decades after being Retail Week’s first interviewee, the name of Conran – who turns 77 next month – is more readily associated with restaurants than retail. Yet he remains an iconic figure in the industry and whether it be the invention of Habitat or the creation of Next, he remains more synonymous with changing consumers’ tastes and habits than any other businessman of his generation.

Today, Conran gives Retail Week his reflections on his 44 years in retail since the first branch of Habitat opened on London’s Fulham Road. In between puffs on his huge cigar – a Hoyo de Monterrey Epicure No 2 to be precise – in his fifth floor Thames-side office, he explains why today’s retail leaders need to believe in product more and gives his thoughts on how retailers should deal with the downturn.

Conran is in no doubt about how severe the present slowdown could be. “I fear Mr Darling could be right,” he says and, having been a furniture retailer for more than four decades – now through The Conran Shop – he knows all about the sector of the market that is bearing the brunt of the likely recession.

The key, he says, is to make the quality and design of the product work harder, while protecting margin and profitability. “You have to promote it, PR it, advertise it – it’s got to be in their [customers’] consciousness,” he says. “One of the things I’m most proud of that I did at Habitat was during a recession – the three-day week one. We produced what we called our Basics range. We found what would be perceived as a good-value cup and saucer, kettle and saucepan, and published a black and white newspaper with the prices boldly marked.

“But we kept our margin and that’s the danger for retailers at the moment. If they don’t keep their margins right, they’ll be out of business very soon – especially at this moment in time, with currency shifts happening almost daily.”

While he admits that his furniture business The Conran Shop – which trades from eight stores worldwide as well as online – is not “booming”, he says: “It’s doing well enough and is beating last year’s figures. The important thing to us is that our forward orders are very good indeed. A lot of people are not moving house, but saying: ‘Come on, when we talked about moving house, we were going to have this nice, fresh interior – let’s see what we can do with our existing space’.”

Key to the success of this business and a central thread through Conran’s career in retail is what he calls “intelligent design”. He explains: “I don’t call it good design – one man’s good design is another man’s bad design – but you can very quickly spot if something is not intelligent.”

He is proud that, through ventures ranging from Habitat to his design studio to the Design Museum in London – which he funded – he has created a better general understanding of the role that design can play in people’s lives.

This obsession with design prompted Conran to set up Habitat in 1964. The previous year, he had opened a factory in Thetford, Norfolk, making flat-pack furniture. But sales were poor, which Conran attributed to how the furniture was being sold – or not – through old-fashioned furniture stores. “The staff looked so bored,” he says. “They were flicking bits of blotting paper at each other.” So he set up his own store, one which was quintessentially of its time. And Habitat was born.

It was a breath of fresh air. The staff wore uniforms designed by Mary Quant and had their hair cut by Vidal Sassoon. Conran says he had a clear vision of who his customer was, targeting cultured shoppers who were likely to be warmly embracing the rapid social and cultural changes of the 1960s.

Habitat grew rapidly in the 1970s, both in the UK and in France, Japan and – trading as Conran’s – the US. Today, Habitat is owned by Ikea, but has not managed to replicate the success of its parent company – its last full-year figures revealed a loss of nearly£11 million.

While he admired former Habitat chief executive Jens Nordahl, who quit to join Lego in June, Conran says that the business has suffered from not understanding its customer in the way it did earlier on in its life.

He believes that, ironically, Habitat’s role of bringing good design to the masses has been usurped by Ikea, to the point where he sees the future Habitat as being like a version of Ikea on the high street.

Both Habitat and Ikea built their reputations on design-led products and, to this day, Conran maintains a vice-like grip on the wares that go into his stores. “There isn’t a product that goes into The Conran Shop that I haven’t seen and given the stamp of approval to. I attend every merchandising meeting,” he says.

This focus on product is something that he feels today’s retail leaders lack. “What is missing in retail are the Vittorio Radices, who are passionate about the product they’re selling, who care about what is on the shelves. Unless you have that interest or passion, I don’t think you’re going to have a very interesting shop.”

However, there are a few exceptions. When asked to name some of today’s retailers that he respects, Conran chooses a short but eclectic list: Waitrose, The White Company and Evans Cycles – all retailers with reputations not just for product, but for quality service and staff who take in interest in their products.

As for the retail leader whom he most admires, Conran does not hesitate in singling out Sir Stuart Rose for his passion for product and the changes he has made to Marks & Spencer’s positioning and to its stores. “Stuart has done a terrific job and M&S is not the dowdy place it used to be. Having tried to make changes at Bhs, I know the difficulty that Stuart has faced. But what competition has M&S got apart from bits and pieces?”

A DIFFERENT STORY

It was not like that in the 1980s. Conran tells a story about being approached by one of the directors of M&S, who accused Next of “making our lives miserable at the moment”. Conran was flattered by the compliment, but thought it was absurd, given the relative sizes of the businesses. “You’re pointing the way to the future,” replied the M&S director. Asked if Next is still doing this today, Conran’s firm answer is “no”.

“I think it’s reasonably good, but I can’t say it stands out today as something different. It’s done the catalogue and the web site very well and that’s very important. But the product is not particular in any way,” he says.

Conran’s involvement in Next began when the board of what was then Hepworths asked his design group to come up with a womenswear concept for a chain of 80 rainwear stores called Kendalls. The idea was to come up with a store that could give an integrated look, but finding the right designer was crucial.

“We found this woman called Liz Davies, who came along with her appendage, George. She was a very good designer and I think she should take a lot more credit for the beginning of Next than she does. George Davies gets all the credit for being founder of Next, but the fact that he had a job at all was that his wife had got a job.”

The 1980s was a frenzied period for Conran, with Mothercare and Bhs being acquired and, along with Habitat, forming the basis of Storehouse, which also came to include Heal’s and Richards. It was a story that ended unhappily for Conran, who lost control of the business in 1990. But he remains adamant that a retail conglomerate of that type can work and have value, as long as it has the right team in place.

“Storehouse was all fairly linked. Bhs, for instance, was involved in home furnishings like Habitat and Heal’s, Mothercare was big in children’s clothing and Bhs was making a big splurge into children’s clothes. Everyone said at the time how it’s disparate, but there’s no reason why a bundle of retailing enterprises shouldn’t work together, providing each of them has a first-rate executive in charge of it – you need someone who’s passionate,” he explains.

A GAP TOO FAR

Bhs was a huge challenge to Conran then, as it is to Sir Philip Green now. Conran had a vision of emulating some of the most innovative US stores – which at that time had yet to come to these shores – but the task of reviving the brand proved beyond him. “Bhs was a disaster, because it was not a takeover but a merger. I’d gone into Bhs with a very clear idea about the position I thought it could have, particularly as M&S was in turmoil at that point in time,” he says.

“I’d seen Gap in America – it wasn’t here at the time – and Banana Republic and I said: ‘There’s an opportunity for Bhs’. So I sent the Bhs buying team to go and study Gap in America with a suggestion that this could be the style and type of merchandise that could give Bhs a real position in this country – good, well-made, classic products at a good price. Of course, they had a good trip in America, came back and didn’t do anything about it.”

He still believes that this positioning could work for Bhs. “It’s a great range of high street property, but it needs a clear vision of what it should be on the high street. The team that’s run Topshop has done a terrific job, so if I was Philip Green, I would say: ‘Can I build on that and how would they tackle it?’”

Physical environments have been at the root of Conran’s success through the decades, whether his own stores, his restaurants or the looks created by his design practice, which he says is noticing that retailers are investing less in their stores as the credit crunch bites.

But he also recognises the importance of the web, which, alongside international growth through franchising, is where The Conran Shop’s future lies. Nick Moore, who was previously managing director of Natuzzi, has been appointed to spearhead this growth. However, the web creates an intellectual dilemma for Conran, who understands its role as a research tool and for order completion, but cannot understand how people can buy furniture online without having seen it in the flesh. “I’m not sure these are the sort of people I’d want as customers,” he jokes.

Whether through a screen or, more likely, a shop or a restaurant, creating an experience is fundamental to what Conran sees as retail’s role in the chain from manufacturer to customer.

He sees his restaurants as being a form of retail too and considers owning them as part of an ongoing battle to persuade shoppers to go out rather than sit in front of the TV or computer – a battle that could sum up the dilemma facing all modern retailers. “The whole business of going shopping, going out for a meal, is desperately important,” he explains.

And, if that battle is to be won, design – whether it be through the store environment or the product – will be crucial. Conran’s missionary-like zeal remains undimmed. “Design is part of the language these days and a very important part. I’m absolutely certain that intelligent design improves the quality of people’s lives.”

Sir Terence Conran on:

Next

“Simon Wolfson is a very clever man, but I doubt he would wear the clothes that Next sells – except at the annual meeting”

Habitat

“It could do a lot worse than look at what Ikea has done out of town and try to do something similar on the high street”

Mothercare

“It’s done a very good job of going abroad and franchising – I can’t say the shops and the products have improved very much”

Bhs

“It’s a great range of high street property, but it needs a clear vision of what it should be on the high street”