By Ashley Coates. Published: 28/01/2013
“In another interview I did the other day he asked “what drives you?” and I said it’s the fear of going skint. People think what drives you is you are greedy and you want more money, it’s the opposite, it’s the fear of failure.”
Chris started out working on his parents’ market stall in West Yorkshire but today his retail chain has over 200 stores and achieved sales in excess of £200 million in 2012. In that year, the company opened 52 new outlets and plans to continue expanding at a similar rate. Despite being more than comfortable today, Chris still gets up at 7.30 every morning to go into work, often getting back after 19.00.
He claims to be driven in part by his competitive nature and wanting to expand the business as well as the fear of failure. Like Poundland and 99p Stores, Poundworld’s USP is providing all its goods for under £1. It’s major difference, largely unique amongst similarly sized retail outlets, is that it is a family business, Chris’ brother, Laurie, co-manages the firm and Chris’ son is also involved in the business.
Chris puts the success of Poundworld down to its simple offering – “Everything £1” – as well as the family-run ethos of the company and the benefits of operating a value retailer during a recession. He started out in 1975 with one shop, rented for £100 per week, but feels they failed to capitalise on the economic downturns in the 80s and 90s due to lack of experience. In 1982, Chris bought an old Mecca shop and started up a nightclub.
He had to borrow heavily from his close family to get the business off the ground and the experience has left him with an aversion to debt, something that has served him well since the 2008 financial crisis. Whereas other major retailers became overwhelmed by the debts they built up during the growth period, Poundworld has largely financed its own, explosive, growth.
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You have gone from working on a market stall to running a nationwide business – many shop owners start with plans to expand massively but find themselves falling short – why do you think Poundworld has been successful where other retail ventures haven’t?
I think there’s two things there, working from the market to where we are now, that was never pre-planned, we always planned to have some shops but never to be nationwide. The reason why we are successful at the minute is two things; value for money always makes you successful and the recession has added to that. So whereas it took us to get from one to one hundred shops over many years, we’ve gone from one hundred shops to two hundred shops in two years.
That’s because the recession has affected us in several ways, it’s helped that there has been a lack of money in people’s pockets, so they are buying for value. The second thing is that landlords took a hit with major retailers going down so there are many more opportunities on the high street and incentives to get you on the high street.
So is there anything about your particular approach that you think has been instrumental for Poundworld’s success?
No I think our approach is very, very, basic. We’ve improved our offering in the actual stores and the standard of the shops but otherwise no. The longer you go on for and the quicker you’re expanding, from a landlord’s point of view, it gives you a better covenant.
It’s not just one factor, it’s many factors, financially, you can do it quicker because you are not having to borrow so much money because you are getting incentives from landlords and there is more opportunity to become a stronger covenant from a landlord’s point of view, so the better the covenant you are, the better the offer you get when you want to open in their stores.
What sort of experiences do you think have helped you from your time on the stall?
It’s just evolution, you don’t realise how much experience you are gaining, you are just keen to get there. It is like many things, I remember negotiating for the first shop we had, and that goes back to 1975, and it was a local property, I can never forget, I think at that time I was offered, rental rates combined £100 a week.
It has been a learning process, for example, during the recession in the 80s, we weren’t experienced enough to take advantage of what was going on on the high street, but when the next major recession hit, which is the one we’re in now, the experience then had accumulated to a point where we knew how to maximise what was going on around us.
It’s about learning a lot over a long period.
Yes it’s about always learning, you say “what given thing” but when I first started buying, I used to buy from wholesalers in Leeds and Manchester, and that’s as far as we went. Now we have a Hong Kong office and a Shanghai office and again, it’s just evolution, we opened the Hong Kong office about ten years ago and that led to the Shanghai office, for different reasons to the Hong Kong office, three or four years ago.
So you didn’t start with a long term strategy for nationwide growth?
We have a long term strategy now, we’ve had a long term strategy for eight years, but prior to that, which is the bulk of my experience, it was just the opposite, you just played it as it comes, on a daily, let alone a weekly basis.
That’s interesting, I had assumed you had a plan for “taking over the world”, or at least the country, from much earlier on.
No, no, I go into many corporate meetings and people ask me the question about where my motivation comes from and I say: “well my motivation was, going back to 1970-something, just to feed my children”.
But that was enough of a drive to push Poundworld in the direction it has taken.
That’s the only driver, no aspirations of taking on the world, just to have a handful of shops in Scotland was enough for me, let alone an office in Shanghai and Hong Kong.
Now that you have enough to feed your family, and probably quite a few, what drives you now, now that I guess getting by isn’t as much of a factor?
From my point of view, my son has just come into the business, he’s 30 now and he came in when he was 16. He’s very much a strong driving force, to support him, is one major thing, and you get the sense of achievement and the challenge, you’ve got the competitive nature there.They always say in business you’ve got to get something out of it for yourself, rather than just looking at it financially. I think you’ve got to get a sense of satisfaction from it all.
So it’s the satisfaction of seeing it grow and develop and become something you are proud of.
It’s about the people you work with and from my point-of-view, it keeps me alive, I mean mentally.
You’ve talked about the responsibility of having 4000 staff working for you and working 24/7 to keep the operation going. Do you have to stick to a rigid timetable to get all your work done? What is your daily routine like?
Very much so, yes, I get into the office between 7.00 and 7.30 every day, it varies a bit, but it’s mainly between 7.00 and 7.30 and I rarely leave the office until 18.30 or 19.30, so it’s long hours. When you’re motivated and you’re driving forward, a day in here, for some people sat behind a desk it may seem like an eternity, but for me every day is like 10 minutes.
So within that time frame, are you a creature of habit?
No, play it as it comes, anything can happen and we’ll deal with it accordingly. There’s no set lunch breaks or whatever, it’s just play it as it comes.
Very much the ethos you started with I guess?
That’s right, in my job I don’t even have a PA, my son goes crazy, and I say “you can’t teach an old dog new tricks!”.
Does he badger you a lot about things like that?
Every minute of every day.
Actually I did notice that my first contact with you was an answer phone message from you personally, I had expected a call from your PA so it took me by surprise! People have talked about Poundworld having a “family ethos”, why do you think that is the case, have you set out to create that sort of feel?
I think it’s that typical self-employed attitude of “if we’re going to win, we’re going to win on our own merit because nobody’s going to give us anything”. You just work as hard as you can every day.
It seems to have worked.
It might sound condescending but it’s not, that’s how it is, it’s built in. There’s just messages every day, now especially, with what’s going on in the high street, thinking about Peacocks, Woolworths and Comet. In another interview I did the other day he asked “what drives you?” and I said it’s the fear of going skint. People think what drives you is you are greedy and you want more money, it’s the opposite, it’s the fear of failure.
I remember seeing that. Looking at those particular retailers you mentioned, what would be your advice to major shop owners in the current climate? Or to someone starting out.
The advice is obviously you need a good offering that speaks for itself, that’s the first thing. I’ve looked at and I’ve analysed Comet and Peacocks in particular, and I’ve noticed the difference between being a soultrader to the corporate position we have now moved to. I’ve noticed corporates could, five years ago borrow a lot, whereas we have kept our borrowing down deliberately.
When I’ve seen the level of borrowed money they’ve got, and it was a ridiculous amount of money, and you just think “they can’t work”, I mean, it probably would have worked if the recession hadn’t kicked in. They hadn’t made the precaution of defending themselves in the event of a downturn, the borrowed money exposes you. So I think the chains of shops have exposed themselves to too much borrowed money and when the banks want to pull back, they can’t cope with it.
Is that the major failure you think has taken place there?
Yes, I think it’s the borrowed money and the bank’s involvement. I was just reading about the demise of Jessops and the realisation that once the bank moves in and says “we need to reduce our commitment to you”, it can’t be dealt with, because if the sales are down in the stores, and behind the scenes they are squeezing to lower your loan or deed commitment, they just over borrowed, they just can’t deal with it. From our point-of-view, we have the same bank facility as we had when we had 100 shops.
Sticking to borrowing, and going back to your earlier period, were there any big risks you felt you took to bring about growth?
Yes, without a doubt, at the beginning, the first bit of borrowed money I took on our first store was so little and we had that under control but when we had half a dozen shops I moved on and opened some nightclubs. I once bought a nightclub for, at the time, in 1982, an agreed a price of £360,000 and my bank refused to lend me the money.
The guy who was selling it introduced me to his bank and I managed to do the deal but the outcome of that deal was that I had to put my house on the line, for security, I had to put my brother’s house on the line, and my father’s house on the line. I went to each one of them and I said “I can’t borrow the money” and both of them obviously offered me the benefit and I took it.
Now if somebody said for the same deal would I do that again, the answer would be no, I think I did it because I was naive, fortunately it was a successful business operation, I realise now with everything else I have done that it could have failed as much as it succeeded.
You now have 208 stores in the country, what are your plans for the future?
If everything stays the same, we are now on course for opening 50 stores per year for the next two or three years. So we are trying to keep the positives going, it would be naive to say we are on a roll and nothing can fail, because it can. If it remains, much of a muchness, where it has been for the last couple of years then we can maintain the 50 stores per year opening programme.
What would you say is different about Poundworld when compared to 99p Stores or Poundland?
This is all very much of a muchness to a point, it’s your quirks, Poundland is owned by a major company, and I do know the originator of Poundland, I remember when he started because we had several meetings at different times in the Far East and he has been to see us up here in the last 12 months but he sold up many years ago, as you are probably aware. VC sold twice, so it’s very much corporate and they’ve got unlimited funding, but we think we can match them with experience if not with funding.
So with Poundland, that’s a big corporate animal and it’s doing very well and they are well run and I wouldn’t knock them in the slightest. With 99p Stores, they’re very much similar to us, but their culture is very different to us, you will have seen that on the programme about us recently on the TV. I think we’re different, I think we set a better standard, and they probably think they set a better standard, but the offering is much of a muchness.
Is there anything you would do differently, looking back on your career?
I think I would have started on this expansion a bit earlier if the opportunity had been there. That’s the only thing I would do differently, maybe buying from the Far East a little sooner.