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Feedback: In conversation with
Feedback: In Conversation With Theo Paphitis A New Dawn For Retail Below: Theo Paphitis was interviewed by Mark Faithfull, editor of World Retail Congress at Autumn Fair.
Bottom: Taking questions.
Retail entrepreneur Theo Paphitis took to the stage at Autumn Fair in September, telling a packed audience, “I can only see opportunities for physical retail to start growing and prospering again.”
With lower business rates and rents, and a consumer hunger for hybrid retail and convenience shopping, Theo confirmed that he was feeling very upbeat about retail’s future. PG&H was in the front row to find out more.
Theo Paphitis was in a very bullish mood when he stepped onto the stage at Autumn Fair in September. Fresh from a six week break, where he said that he had time to reflect and take stock, he was brimming with confidence that retail was ‘through to the other side’.
“If it hadn’t been for Covid, it may have taken another five years to see the transformation, the rebirth of retail,” he stated. “However, what Covid has done is to accelerate everything by at least five years, achieving that rebirth in 18 months,” he told attendees.
“You have to imagine that retailers have been on a massive travelator, with the direction of the travelator going backwards, while retailers have been trying to look forwards. We’ve been walking, and walking faster, but the travelator’s been going faster and faster - and backwards. Retailers have therefore been jogging, but in the end it’s been full pelt just to survive. And when the travelator was going backwards, if you didn’t go fast enough you fell off, with some great household names in retail doing just that, retailers who weren’t able to run fast enough in the opposite direction to the direction of the travelator.”
He cited Top Shop, Top Man and Debenhams, pointing out that retailers such as Comet and Woolworths were among those that had fallen off the travelator early on.
Nevertheless, he urged retailers to be careful and not get carried away. “The world is growing and evolving at a rapid rate, with Covid accelerating the differential between physical and online retail. Prior to Covid and the speed of the travelator, we had a ridiculous disadvantage in terms of ridiculous business rates and ridiculous rents, with physical retailers finding it really tough. We were peddling very fast to stand still. On top of that, we had to endure our online competitors, without the same cost base, taking away some of our business. Therefore while our costs were going up, we were losing business. I now believe that this is truly coming to an end or has already come to an end.”
He continued: “what we’ve seen, spectacularly, is the collapse of the shopping centre industry in the way it worked. We’ve seen big shopping centre owners go bust. But we’ve also seen that the people who are taking over the shopping centres have become more realistic, allowing retailers to predominantly pay turnover rent. This will ultimately pay dividends, with more retailers taking space and helping to drive footfall into the centres.”
Encouraging retailers with retail outlets to open more stores, he told the audience: “Now is a wonderful time for those who want a bigger physical presence, and now is the time to do a deal, although it doesn’t mean retailers shouldn’t have an online business as well, which is a must. But this is the time to grab opportunities. It’s never been more positive as far as retail is concerned. The costs of having a physical store are going down while the cost of online marketing is going up, driven by online players having to keep showing growth. I’m not saying that they are perfectly equal yet, but it’s much more competitive,” he stated. “With lower rental costs and lower business rates, I can only see opportunities for physical retail to start growing and prospering again.” As for his own retail businesses - Robert Dyas, Rymans and Boux Avenue - which have worked both online and offline over the past 19 months, Theo was asked if it had made him think differently about the business and about the balance. “Covid was the most amazing forced retail experiment,” he replied. “All of a sudden, people lost us as physical retailers, but they could see that we could still trade. So, hybrid retail is here to stay. It’s not going away. People are used to using technology every day and it’s technology that brought the two together.”
Asked if we could be entering a ‘golden age of retail’, he said that it’s never been easier to become a retailer. “You can do it from your back bedroom. The barriers to entry have come down so quickly I didn’t think I would see it in my lifetime, and it’s thanks to technology,” he pointed out.
Commenting on his own stores, he confirmed that they have been doing well and are seeing growth because there’s still a demand. “Sixteen to 18 months ago, I would have said that it would be long and very painful,” he admitted. “However, people want to go out and do the things they did before the pandemic. They don’t want to do everything online. In our shops, we are seeing a bigger average spend although footfall is slightly down.”
Referring back to his analogy of a retail travelator, he explained: “I’ve been through many recessions and have always been incredibly positive that we would pull through, but this is a different time. We still have challenges, we could still have further lockdowns and restrictions, but I think we have arrived, and that is key. There has been a reduction of physical costs, so now online and physical retail are almost exactly the
same. It’s no longer two different things. We can enjoy hybrid retailing - giving customers what they want, when they want it - and meeting their different expectations for both. It’s convenience shopping. I’m sure we’ll have a few landmines and hiccoughs along the way, but as retailers, we know where we have to spend our money and our investment. We have the tools and the technology we need.”
So how does Theo view the secret of his success? “The harder I work, the luckier I get,” he told PG&H. “I love what I do and although it doesn’t always go right, overall I’m please to say that it does.”
Theo’s View On... Today’s Consumers
“Giving customers what they want, when they want it, is key to being a successful retailer,” stated Theo. “Today’s consumers are demanding. There are times they want to do this - go into a physical shop - and times they want to do that - shop online, and as a retailer, you have to provide that service otherwise your customer will go elsewhere.”
Theo’s Views On... Convenience Shopping
Discussing convenience and neighbourhood/local shopping, Theo stressed that there are opportunities for those with physical stores. “There are some considered purchases that the high street can’t supply, but overall, with so many more people working from home, people are happy to go into their local high street for everyday purchases, not just one day a week, or one day a month, but visiting regularly.”
He continued: “Convenience shopping is growing, and we have seen our stores in market towns and on high streets doing incredibly well. So much so that we are currently investigating 200 new sites. This is the time to do it, while there is availability. These sites won’t be there in two to three years’ time.”
Left: Theo feels passionately that retail will not only survive but thrive. Below left: While at Autumn Fair, Theo visited #SBS company Kate O’Brien Art.
Theo’s Views On... Business Rates
Theo Paphitis has long been a champion of pushing successive governments to make business rates more realistic. “Since Covid, we’ve seen a suspension of business rates, and a reduction in business rates for this year, and that has to continue,” he stated in September (prior to the Chancellor’s Autumn Statement).
“Business rates can never go back to where they were. It would be disastrous. With lower business rates and lower rental costs, I can only see opportunities for physical retail to start growing and prospering again.”
