Interview: Lord Harris, Outstanding Contribution to Retail

Not content with building a 633-store business from scratch while establishing  a string of successful academies in some of the most deprived parts of London, philanthropic Carpetright founder and chairman Lord Harris of Peckham now has his sights set on Olympic glory in London this year.

The 69-year-old owns show-jumping horses and is gunning for gold this summer. It is one of the interests he has to help him wind down, he says, although it does not sound like the most relaxing of past times. 

But it is typical of him. “I like the difficulty of beating everybody,” says Harris. It is an ethos that has brought him huge retail success over decades.

In a harsh market that has brought the demise of countless floorings independents as well as the contraction of main rival Allied Carpets, Carpetright still stands as the market leader – and by some distance. It controls more than a quarter of the floorings market.

Fighting chance

While times have been tough in recent years – the harshest Harris has ever known it – one thing is certain: trading has been a lot more challenging for Carpetright’s rivals.

Carpetright has had its knocks too, and has posted profit warnings in the past year as shoppers put off discretionary purchases. The retailer reported a pre-tax loss in its first half.

Harris says the past three years have been the most challenging of his career.  “It’s very difficult to budget. The tops and the bottoms can vary 30% from week to week, and I’ve never had that before,” he says.

But, as is typical of successful entrepreneurs, Harris is also relentlessly focused and optimistic. “It’s an exciting time as well, because you don’t know what’s going to happen,” he says.

Harris, who has been boss of Carpetright for 24 years, shows no signs of slowing down. He is overseeing one of the most dramatic overhauls of Carpetright’s stores after admitting that the business “lacked innovation” in the past five years.

The retailer conducted customer research and an anonymous, casually  dressed Harris sat in on some of the focus groups. He was rather shocked at what he heard. 

“They disliked the outside of the store; they said it was dirty,” he recalls. “They said it doesn’t resemble the inside of the store, which they liked. That means we don’t have to change too much. It’s achievable.”

Customer research showed that 62% of Carpetright customers never shop with a rival, which Harris describes as “great”. But naturally he immediately thinks about how he can convert the remaining 38%.

In order to do that, the retailer is overhauling its shops, introducing a new cleaner logo, a more appealing colour scheme in-store and clearer point of sale.

“It gives the shops a completely different feel,” says Harris, enthusiastically spreading pictures of the new look shops over his desk.

Carpetright aims to provide the customer with a journey around the store to simplify the buying process, which Harris says can be complex.

Crucially, the costs of options have been roughly worked out for the consumer too and are displayed on each carpet, indicating the price of flooring a small, medium and large room.

“When you buy a carpet you don’t always know the price. You know it’s £10 a metre, but what does that mean to most people? How much is it, how much is the fitting, how much in total? It’s not like when you buy a £300 dress, and you know it’s £300.”

Multichannel moves

Carpetright has also been investing in its online offer. Harris has always said that it will never become a big sales channel because customers like to touch and feel the product, but he does not underestimate its importance as a marketing and customer service tool. Shoppers can order samples to be delivered to their homes, for instance.

“The internet is very important to us,” says Harris. “We’ve got a fantastic system, but are we using it to the best advantage? No.”

Carpetright’s website receives 80,000 visits a week, and the number of carpet sales across the entire market is 160,000 per week. “50% of the UK market look at Carpetright, and we sell to 30%, so we have 20% to go for,” says Harris.

A mobile site launched in January and accounts for 10% of traffic already.

In a shift away from a focus purely on carpets, Carpetright last year ramped up its beds business. It was a brave decision in one of the most severe downturns in recent memory, but beds are not a new category for the carpets king. “When we were Harris Queensway we were selling more beds than anyone in the country,” he points out. “So we do know the beds market, but we’ve still got a lot to learn.”

While he may not be leading the beds market just yet, there is no question of his dominance in the carpets sector. Perhaps surprisingly, Harris says he would enjoy more competition. “I’d like to see another Harold Plotnek [Allied Carpets founder] turn up. The biggest problem with this country is we don’t have enough entrepreneurs,” he says.

Harris became an entrepreneur almost overnight. Dreams of becoming a professional football player were abandoned when, as a 15-year-old, the Arsenal fan had the family business thrust upon him, inheriting three south London carpet shops following the death of his father in 1957.

So when he first set out in retail, did Harris dream he would be sitting in his rather grand office in 2012, leading a listed company, employing thousands of people and owning a state-of-the-art cutting facility?

“When my father died in 1957 we had three shops, so I think the first dream was to get to 10. Then it’s 20, then 50, then 100. You don’t dream of what’s going to happen in the next 10 years,” he says.

And all these years on, Harris is still excited by his day job. “It will be 55 years in retail in October, and I have enjoyed every minute of it and still enjoy it as much as the first day.”

Harris, more than most, knows what it takes to get a business up and running. What advice would he give any would-be retail entrepreneurs today?  “One, they must know it will be hard work and that it will take some time. Two, they’ve got to be determined in what they do. Three, they always have to look at the cash flow and four, they have to look at the competition.”

Harris says that among his peers he admires Dixons founder Lord Kalms for doing a “great job in a difficult business”. He also cites his good friend DFS founder Lord Kirkham and MFI founder Noel Lister as marketing supremos. Harris says: “One could make cheap furniture look good and one could make average furniture look brilliant.”

How would Harris describe his own leadership style? “I wasn’t very clever at school but I was good at sport, and that made me realise that the most important thing in life is people. I like to get on with people, to get the best out of people.  But, if they’re not doing the job right, I’m prepared to be very tough with them.

“People make the difference, as does knowing what you want to do and doing it. I don’t think I’m very clever, I just know what I want to do,” he says, with characteristic modesty.

A people business

Over so many decades in the retail sector, Harris regards the advance in customer service as the biggest change in that time. “When we started, people bought a piece of lino and put it down and placed a rug over it. Now they want it fitted. Customers will always remember a bad fitting, that’s why every one of our fitters have gone through a fitting academy.”

The retailer has introduced a ‘happy call’ to check if customers are pleased with its fitting service. “Before it was ‘we should do it’. Now it’s, ‘we’ve got to do it’,” says Harris. Fitters also now tidy up after themselves and hoover the carpet.  Complaints have dropped from 160 to 80 out of 40,000 customers a week.

There is no doubting the level of Harris’ success, but is there anything he would have changed? He says in the long term, no, but in the short term, with the benefit of hindsight, he questions some decisions. “If I’d known we were going to hit hard times I wouldn’t have bought this building [head office] or spent so much on IT. But these things are for the future.”

Hard times ahead

The retail veteran has navigated his way through a few recessions, but this downturn is different, he says. “All my recessions have only been two years. This recession’s going to be five or six years. In 2010, I said we’d be out in 2012. Now I think it won’t be until 2014. But if the Government carries on doing what it’s doing I think we’re on for a very good run from 2015 to 2020.”

A combination of higher levels of taxes including VAT, rises in the costs of fuel and utility bills coupled with subdued pay increases and high levels of personal debt, makes this one worse, he says.

Harris, a Tory peer, believes the coalition Government has handled the crisis “very well” but, with tough times likely to continue, he has one aim in mind for the next five years; restoring profitability to 2008 levels and above. “That’s the single goal that everyone’s got on their mind,” he says.

Looking further ahead, Harris says in 10 years time Carpetright will have fewer stores – probably 400 to 450 – “with a lot of multichannel”.

“I still think people will want to feel and touch carpets. That won’t change,” Harris says. “I think we’ve got lots of opportunities. I’m very enthusiastic about the business,” he says. “When the economy starts to change we will get a very big upside.”

It is well known that Harris is effectively preparing his son Martin to take the reins when he retires. But because Carpetright is a listed company, the decision will ultimately lie with the board.

“Martin and I have always said it has to be the right person at the right time,” says Harris. “He’d be very happy to work under someone better.”

Besides, Harris has no plans to step back just yet. He says he would be “very happy to be chairman of the company for a long time” and will stay chief executive until the “right time to change” comes. “But that doesn’t mean I’ll slow down,” he is keen to emphasise.

It is hard to imagine any time when the energetic and bright Harris will slow down. On the day of the interview he was planning a trip to the House of Lords to vote that evening, and was plotting a trip to the US – with Kirkham – to visit the horses they jointly own.

With the grit and determination he has shown building Carpetright and the academies network, it would take a brave person to bet against Harris winning Olympic gold this summer.