The dominance of the big national and global retailers on the high street at the expense of small, local independents is one of the most contentious topics in business today.
Some local retailers, however, have prospered and grown into well-established regional chains, with sizeable turnovers and a large local workforce.
While they might be unheard of in the rest of the country, they have become part of the fabric of their own region. So what is behind their success? Why have they so far shunned national expansion? And can they survive long-term?
The attributes that make a good regional operation are the same that make any retailer successful – a complete understanding of your customer and a passion for getting service right.
Crucially, locally based retailers are often better placed to appreciate and respond to both the tastes and demands of local customers.
He cites the examples of Sainsbury’s – originally from London – and Morrisons – from the North – as examples of large national retailers that have had to grapple with shaking off their regional focuses.
Hughes says the number one threat to his business is the foray of the big four supermarkets into non-food. In order to compete, there is now an absolute focus on service and staff are expected to have a thorough knowledge of the retailer’s products.
Managing director of Scotland-based Pagazzi Lighting Alan Pagan says that although the company wants to expand, it is committed to maintaining the quality of service that defines it as a specialist independent.
As a smaller operation, a regional business also has the advantage of being closer to what is happening in the market and can respond quickly, whereas, with a larger company, the speed of awareness and response can be far slower.
However, Hughes says that in electricals the buying power of the big players is overstated. Because of regional collectives, smaller retailers’ clout with suppliers is not far behind that of the nationals. “Some manufacturers are more than happy to deal with smaller retailers because they don’t want the big ones to get any bigger,” he explains.
Booths wants to expand, but in its 160-year history the retailer has only ever grown organically and Booth is adamant this will remain the case. Sensible, sustained growth is the focus. “We like to think of it as basic Northern common sense. Real money, not funny money – if you make money, you can spend it. We want a sustainable business in the long-term,” he says.
But as the retail industry braces itself for an economic slowdown, can regional chains such as these hold their own? Booth says that if you have grown organically and built a good asset base, it can provide security during difficult times. “We own the vast majority of the business. When the economy becomes stormy – as it is starting to now – we can survive,” he says.
Pagan points out that, while on the one hand, it is harder because smaller retailers don’t have the huge cash reserves of the nationals, they do have the ability to react faster to changes in customer demand. “They are much more fleet of foot and that works in their favour,” he says.
Many have forecast a future of homogenized replica high streets across much of Britain. But there are many businesses that would suggest regional retailing is a thriving business model that can and will survive.
It now has 35 stores in East Anglia, as well as an online business, and makes an annual profit of about£2 million. Hughes says moving online has allowed the company to acquire a national customer base, while still only having a physical presence regionally. He believes the internet is the source of the majority of future growth. “It allows you to grow without great cost,” he explains.
Hughes doesn’t anticipate becoming a national retailer in terms of physical stores. He says there are two big national electricals retailers – Currys and Comet – and traditionally the third, such as Tempo and PowerHouse, which both collapsed, always fails. “The market just can’t sustain them,” he says.
Established in 1846 in Blackpool by Edwin Henry Booth, Booths originally sold tea to society’s elite, but has since grown to become a 26-store independent regional supermarket chain. It has never failed to make a profit. The business is still owned by the Booth family, bar a 4 per cent stake held by the employees. In the past decade turnover has grown from £97 million to £230 million.
The business is compared with anything from a large farm shop to a Northern Waitrose.
He says corporate responsibility is not only high on the agenda, but has been built into the fabric of the business.
Over the next two years three stores will open and there are four or five prospects for the next phase after that.
This Scotland-based specialist lighting retailer made it into the Sunday Times Fast Track 100 list last year – ranked 57th. It began as one shop in Glasgow city centre in 1980 but, in 2002, tried an out-of-town format and has not looked back.
“The change into retail parks has worked for us but, more importantly, it has worked for our customers and our suppliers,” says managing director Alan Pagan.
Pagazzi now has seven superstores, including six in Scotland and one in Chester. It prides itself on excellent customer service, expert knowledge and having 15,000 lines available to “take home today” in every store. Shops stock everything from£1,500 chandeliers to low-cost children’s lamps.
The retailer is still run by husband and wife founders Alan and Laura Pagan. In February 2006 it received a£500,000 investment from Ashley Bank Investments. Sales have grown 81 per cent a year to £5.6 million in 2006.
The next step will be the launch of an online business. The company also expects to open another store in either Scotland or the northwest of England in the next year.