Exclusive Interview with Theo Paphitis
Theo Paphitis may be best known for his stint on Dragons Den, but perhaps his real legacy will be as a determined champion of retail, an entrepreneur who continues to invest in the high street.
This year, December’s sales across the sector dropped by 0.1 %, which may not appear too bad, but this is only because it is compared to an incredibly bleak set of figures from 2015.
Who would consider investing in the High Street in such a climate. Well, Theo Paphitis, for a start!
The Surrey entrepreneur has demonstrated time and time again that he can spot a winner, and he is sure that the party is not over yet for our retail industry. He also puts his money where his mouth is.
Although he originally built up his portfolio through ventures in property, finance and telecoms, it’s retail where his passion lies. He took on well-known lingerie chain La Senza, which he sold in 2006 for £100m. Today he owns stationery firm Ryman, homeware chain Robert Dyas and Boux Avenue, another lingerie outlet, all of which he has gathered together under The Theo Paphitis Retail Group umbrella.
Is it just a nostalgic glance back, a rose-tinted trip down memory lane, back to the days when shoppers thronged to the town centre, happily spending their hard-earned cash?
Clearly, any nervous would-be entrepreneur who entered the Dragon’s Den, would testify that getting the dragons to part with their cash is never the easiest thing to do. No successful businessperson can survive without intensive scrutiny of the risks and rewards. And it seems that Theo’s faith in retail is not misplaced.
Amid all the despondency in the lead up to Christmas, Boux Avenue saw a like-for-like increase in sales of 16.6%, Ryman’s sales rose by 1.4%. and Robert Dyas reported a 2.0% hike. The strategy behind this success was combining the strengths of e-commerce with those of bricks and mortar.
I sat down with Theo for an exclusive interview for Platinum Business Magazine and asked him, amongst other things, about the future of the high street:, “I have never known a more dynamic time for retail. Working with heritage brands, Ryman and Robert Dyas that have both been around for over a century, the pace of change is more challenging and opportunistic than ever. Having started the Boux Avenue business only five years ago, even in this relatively short space of retail history, we have seen our business plan adjusted to take into account the momentous changes in shoppers’ habits.
“Retail, especially within bricks and mortar in the UK, is facing the perfect storm. It faces changes in consumer habits, the impact of the weaker pound against the dollar and euro, coupled with increasing labour costs, the apprenticeship levy and the sucker punch in the lack of an honest and equitable reform of what is an archaic system of business rates.
“With regard to the so-called recent business rates reform, retail has changed dramatically over the years but is faced with a tax that was introduced in a different world. The facts are that footfall and activity on our high streets and town centres are in decline but businesses like ours are about to see an overall increase instead of a decrease in their rates bill in the next 12 months.
“Retail is facing many challenges but at the same time we see opportunities that come with the continued development of technology that makes shopping as convenient for customers as it has ever been. We will continue to invest in this area to ensure that our much-loved brands interact with customers in ways that suits them best.
“We have invested significantly in the last two years building and modernising our infrastructure, in particular commissioning a new warehouse and distribution facility in Hemel Hempstead and new websites for Ryman and Robert Dyas to meet the changing needs of today’s consumer. Boux Avenue will be moving to a new e-commerce platform this quarter.”
It appears that rumours of the death of the High Street may have been greatly exaggerated.
How much did your upbringing influence your entrepreneurial spirit?
“My upbringing had a huge effect on my work ethic and my entrepreneurial spirit. My family are Cypriot and both my Father and Grandfather worked on the British bases there. When the British government granted independence to Cyprus, all those who worked for them were given a British passport, and this became their greatest asset.
“We moved to Manchester when I was seven, before eventually moving to London. After my parents divorced my brother and I were raised by my mum in a council flat and were often left to our own devices, which really helped later in life, as we had faith in our own abilities and were never afraid to make decisions.
“There wasn’t any extra cash so I never had pocket money. I think this is what inspired me to go out and get a job in my early teens, I worked in a Wimpy Bar and delivered cab company cards for a bit of money. I realised what you could have if you worked hard.”
What advice would you give to a small business or a start-up?
“Always stack the cards in your favour, and reduce the risks. My business success relies on a risk to reward ratio. You have to be honest with yourself. I have had numerous people say that “everyone thinks my idea is fantastic”, but it is so important not to delude yourself. Learn to understand your competition, do your research and always take advice.
“You will not have a million pound business over night. You start small and work your way up. Not everyone is entrepreneurial and faking it can be a long, frustrating road. Not everyone is a premiership football player… some are Sunday league – but that doesn’t mean they don’t love what they do just as much!”
Do you miss Dragons Den?
“Leaving the Den was a decision I did not take lightly. It was a wonderful experience and a lot of fun but I had started up Boux Avenue, over five years ago now, and it seemed like the right time to leave and concentrate on growing my own businesses. It is something I look back on with great fondness but all good things eventually come to an end. I’m still in touch with lots of the dragons, and Peter Jones and I co-own Red Letter Days together.”
You are very active on twitter, is the Small Business Sunday (#SBS) project still ongoing?
“Twitter is a great way for me to interact with small businesses. The competition runs between 5.00-7.30pm every Sunday and six winners are given a boost every week via a retweet to my followers, and becoming part of the #SBS network. It is a free boost for them and Small Business Sunday (#SBS) is now in its sixth year, with over 1900 #SBS winners so far. I have had some businesses who have tripled in size in the space of a year, grown their twitter following and gained entrepreneurial confidence as a result.
“The sense of community amongst the winners is incredible and this is particularly evident at the annual #SBS winners event. It is their opportunity to build upon the boost, network, learn and help their business. It is their network to make of what they will.”
You have spoken of a perfect storm for retail ‘within bricks and mortar’, with the low pound, internet competition and high business rates. Is the High Street doomed?
“The concept of “bricks and clicks” makes for a successful business. There has never been a more exciting time for retail and this is due to the irrevocable change e-commerce has given the industry. The potential is huge! This does not mean the high street is over but a combination of the two is a winning combination.”
You have also spoken about the problem ahead with business rate reform. How would you like to see business rates decided to protect retailers?
“The facts are that footfall and activity on our high streets and town centres are in decline but businesses like ours are about to see an overall increase instead of a decrease in their rates bill in the next 12 months. I would like to see a more balanced approach – something that will help rather than hinder businesses. It is an archaic system that is being used in an ever changing, modern business world.”
You have combined Boux Avenue, Ryman Stationery and Robert Dyas into one retail brand. They seem unlikely bedfellows. How has the unified branding helped with the growth and management of very different markets?
“They are all stand-out brands in their own right. Robert Dyas and Ryman are rich in heritage and Boux Avenue is a vibrant fashion brand that is leading in its marketplace. In November last year I completed the acquisition of the iconic London Graphic Centre, the leading supplier of material to the art and design community, adding a fourth business to my portfolio. The unification of the brands under the Theo Paphitis Retail Group has been a great success and there are many ways that they all compliment each other and many employees work across all four brands.”
Aside from the three big retail chains, are there any other business which you are actively involved in?
“I am chairman of MB Partners, a boutique sports management agency as sport is a huge passion of mine. As many people know, I was Chairman of Millwall for 8 years and I have a long-standing love of F1 too. Working with MB Partners gives me an opportunity to pursue this interest. Alongside this I also co-own Red Letter Days which sells experiences, anything from sky diving to spa days for consumers and businesses! “
What plans do you have for the three retail chains?
“In the last two years we have invested heavily into building and modernising our infrastructure. In particular, we have contracted a new warehouse and distribution facility in Hemel Hempstead and also developed new websites for Robert Dyas and Ryman, to meet the ever-changing world of retail and e-commerce. We are looking to do the same for Boux Avenue this year.”
Was taking Millwall to the FA Cup Final your greatest achievement!?
“Millwall getting into the FA Cup final against Manchester United was certainly a day in a million, and not a day goes by when I don’t reflect on my time at Millwall. There were good times and challenging times, but I’ll never forget Wembley, the semi-final or the final. These were all dreams and ambitions, that as a kid you wouldn’t have dreamt you’d be part of. Certainly one to remember.”
Can you tell us more about The Paphitis Charitable Trust?
“The Paphitis Charitable Trust distributes fees from TV appearances, speeches and my book to causes close to my heart, especially children’s charities. Funds received are then distributed by a panel of trustees to a variety of registered charities.
“I typically like to assist smaller UK charities that have difficulty in gaining funds from other organisations and I’m pleased to donate to many different ones every year.”
Now you are successful and money is not an issue, what drives you to keep going?
“I am inspired by many things in my life, from friends and family to my businesses and the people I work with. I love working, and to not work would be to stand still and in retail, is you’re standing still you’re dead in the water and that’s not what’s going to get me out of bed in the morning. Retail is vibrant, passionate and, of course, particularly challenging at the moment, and I wouldn’t want to miss out on what’s coming next.”
Finally, where do you see the UK economy going in 2017 (Trump, Brexit…)?
“The shock of Brexit was definitely felt, but there have been lots of positive signs since and we need to remember that. In recent weeks we have seen many important countries, including the US, being very positive about trade deals with the UK after Brexit, suggesting it may not be as bad as the ‘fire and brimstone’ scenario we’ve been warned about. We need to look at the opportunities and build on those, not wallow in the predictions of doom and gloom, as that isn’t going to get us anywhere. Britain is open for business and we need to remember that.”