Star Qualities

When Dame Anita Roddick died of a brain haemorrhage last month, the retail world said goodbye to one of its most famous entrepreneurs. Within a matter of days it had experienced a virtual loss when Sir Richard Branson sold his Virgin Megastores chain, which he founded 37 years earlier. Last year, John Caudwell also bowed out of retail after selling his Phones 4U business.

So who is left? In retail, who could be called a genuine entrepreneur? Names that would trip off most retailers’ tongues might include Sir Philip Green, Charles Dunstone, Sir Tom Hunter, Lord Harris, Harold Tillman, Mike Ashley and Theo Paphitis – undoubtedly a very successful tycoon but one whose fame has largely been achieved by BBC2 TV series Dragons’ Den.

Retail needs its entrepreneurs. They are usually the big personalities who provide considerable colour in the business world. They are the risk-takers who drive an industry forward. And they are the creative brains who inspire the next generation of business men and women. However, out of all the directors within all the retail businesses, those who could genuinely be deemed entrepreneurs are few and far between. So what does it take to be one?

Earlier this month, Carpetright founder Lord Harris was named Ernst & Young’s Entrepreneur of the Year. When considering entrepreneurial prerequisites, many might think of attributes such as vision and fearlessness. While possessing those skills can only help, Lord Harris believes it boils down to luck first and foremost. “I was fortunate because the market had dumbed down at the time I set up the company,” he recalls.

Second, he continues, you need to motivate people and third you need to know the market. He also adds: “You can’t teach the skills you need.”

As Carphone Warehouse founder Charles Dunstone says: “Retail isn’t a complicated business, but it requires a lot of determination and passion.” He adds that customers can often see the character of an entrepreneur in their business, and cites Lord Kirkham at DFS and Lord Kalms at Dixons as examples. “If you’ve got someone standing at the top of a business who has invented a business, it gives a great lead and inspiration to the people within it,” he adds.

In her autobiography, Roddick is derisive about the fact that those at the helm of hallowed organisations such as Harvard University often asked her to talk about entrepreneurship. That the Ivy League assumed this concept could be learned made her smile: “How do you teach obsession? Because more often than not, it’s obsession that drives an entrepreneur’s vision. How do you learn to be an outsider, if you are not one already? Why would you march to a different drum beat, if you are instinctively part of the crowd?”

Claire’s Accessories founder Mark Smith says inner confidence is an innate characteristic. “I left a job in a bank at 21 because I knew I needed to do something different. I had the self belief that, ultimately, I was going to make it,” he says. He also believes that flexibility is essential. Entrepreneurs are people who don’t believe in sticking to a rigid plan.

Roddick was adamant that entrepreneurs possess a unique way of thinking. “They look at things in a different way. They are not scared of sacred cows, like bank managers, or hierarchical structures or problems that would daunt others,” she said. Kaisen Consulting business psychologist Rowan Bradford backs up this viewpoint. “They have the ability to come at things from a completely different angle and have the courage of their convictions to take the risk to do it,” she says.

SCHOOL’S OUT

One common theme among entrepreneurs is their lack of interest in academic qualifications. At 15, Branson was more preoccupied with selling ads for his magazine, Student, than he was with studying. This prompted one teacher to write in a report: “He will need a lot of luck with the exam questions in July.”

Iceland founder Malcolm Walker has four O-levels and what he calls a “degree in common sense”. Dunstone dropped out of Liverpool University. Green left school at 15, Paphitis started working as a tea-boy with Lloyds of London at 16. Jaeger chairman Tillman joined the Savile Row tailor Lincroft aged 19 and proceeded to take the company public just five years later.

Interestingly, Roddick also noted that many entrepreneurs have known deprivation or difficulty. “There is often a loss in their lives, perhaps that of their childhood by being forced to work at an early age, or being sent away to boarding school, or losing a parent,” she said. Roddick believed she was traumatised by the death of her father.

Her theory may not apply to all, but if you look at some of our most famous retail tycoons’ backgrounds, there are certain correlations. Green was sent to boarding school aged nine and lost his father just three years later. Branson was also a young child when he was sent to boarding school – once there he struggled with dyslexia. Hunter is from a deprived estate in Scotland. Like Branson, Paphitis also had academic problems at his north London school after they failed to detect his dyslexia.

Whatever their personal experiences, entrepreneurs certainly possess an abnormal breadth of thinking and creativity. Take Ikea – a now familiar and everyday concept. It is easy to forget that founder Ingvar Kamprad’s vision was one that totally broke the mould of furniture retailing when it was founded in 1943.

CHANGING TIMES

Furthermore, they are often driven by far more than a desire simply to rake in the cash. For most entrepreneurs, work is a hobby. It’s fun. Which is why many people who have sky-high bank balances could never imagine cashing in and kicking back.

David Lester, an IT entrepreneur who had made his first millions by the time he was 30 and who now invests in and advises start-up businesses, says: “If you’re doing it to make a quick buck, that’s unlikely to work. If that’s your motivation then you’re not driven by the business, you’re in it for yourself.”

So what does the future hold for the next generation of retail entrepreneurs? Lord Harris insists there are just as many opportunities today as there were when he started out. “If you’ve got it, you’ve got it,” he says.

Ernst & Young head of entrepreneurial growth markets David Williams says he has always viewed the sector as fertile ground for developing business opportunities. It may be tough to get going, but new businesses have the ability to change direction to suit the market far more quickly than established brands.

But Smith believes that while there are plenty of entrepreneurs out there, it is tricky to succeed today largely because finding a new concept that works is difficult. One man very familiar with how retail times have changed is Jonathan Elvidge, who founded the Gadget Shop in the early 1990s. Two years ago, he started again with new gadget business Red 5.

Elvidge says it is undoubtedly tougher than nearly two decades ago. Aside from the fact that his naiveté was a great help back then, because “I had no idea what I was letting myself in for”, he says people are less willing to take risks on new retail businesses. That includes everyone from banks and landlords to shopping centre management. When starting out with the Gadget Shop, Land Securities allowed him to open a store in its flagship scheme, in Hull, despite the fact, as he now freely admits, his project was “underfunded” and he had “no retail background”.

The move away from venture capital towards private equity may pose another problem for the entrepreneurs of today. Venture capital’s sole goal is to back promising start-ups, but it has become significantly quieter in recent years. Private equity is rife today but it errs on the side of caution. As Elvidge explains: “Private equity wants to see performance, trading history and market analysis. We approached a few organisations [when setting up Red 5] and they were very interested, but they basically said: ‘Come back in two years when you’re established’. They don’t want to risk setting you up.”

While many out there possess entrepreneurial attributes, there is also a risk they can become stifled in certain organisational cultures – particularly public companies. Lord Harris says: “I’m not criticising public companies, but there are certain rules you have to play by. Entrepreneurs are looking for adventure and excitement.”

Smith adds: “You see some retail organisations where people aren’t able to make any decisions at all. You’ve got to let people take risks and then support them if they make mistakes. These are the guys with the new ideas. Retail is a vibrant sector and you need people like them.”

THE NEXT GENERATION

Privately owned organisations tend to be more willing to let entrepreneurial tendencies shine, says Bradford. “As soon as shareholders get involved, there is a greater desire to play it safe and risk-taking is discouraged.” This is entirely justifiable. However, more businesses need to be aware that fostering entrepreneurial characteristics will help the whole retail sector become more dynamic, fresh and interesting.

Nevertheless, every industry needs managers just as much as it needs its entrepreneurs. Walker says: “The entrepreneur’s style is inevitably a bit more chaotic, intuitive and shoot-from-the-hip. That’s fine in a smaller business, but as it gets larger you need that professionalism – the ideal is to manage the two.”

Lord Harris concludes that many would-be – or wannabe – entrepreneurs overlook the fact that it takes a great deal of determination and hard work to found a successful business. Many people think it looks easy and not all have the commitment to last it out when things go wrong, which they often do.

Branson, for instance, was charged with selling exported stock soon after he established his record business. His mother had to remortgage the house to pay for an out-of-court settlement. Lester says: “It’s easy to look at successful entrepreneurs and see their businesses doing well and the founders looking relaxed. But when the going gets tough, are you going see it through? It takes a lot of guts to do. Typically, retail entrepreneurs have put their heart and soul into it and have sweated blood for years to get somewhere.”

Will we see a new generation of retail entrepreneurs to rival that of Roddick and Branson? It’s questionable but plenty more are coming through the ranks. After all, everyone who has started a business is one by definition and many newer businesses such as Play.com and Asos are beating their more established rivals at their own game. And, as Williams points out, the Bransons have taken some time to get where they are today.

But the modern retail landscape is inevitably very different. Perhaps there is less opportunity to be creative and daring. Perhaps today’s entrepreneurs are being stalled by business culture. So, if you are lucky enough to have entrepreneurial types in your organisation, cut them some slack. As Walker warns: “Too much process, procedure and corporate governance doesn’t put cash in the till.”

THREE OF RETAIL’S GREATEST ENTREPRENEURS

Dame Anita Roddick

Born: October 23, 1942, West Sussex
Started in retail: age 33
facts and figures: Roddick, daughter of an Italian/Jewish immigrant family, was born during the Second World War in a bomb shelter. She trained as a history teacher before setting up a restaurant and hotel.
In 1976 she established the Body Shop in Brighton. Aside from financial necessity, she was exasperated at the price of cosmetics, the lack of natural ingredients and the fact that they were only sold in large containers. “If something irritates you, it is a good indication there are other people who feel the same,” she said.
Everything about the first store was determined by a lack of cash. It was dark green not because of an environmental metaphor, but to cover up damp on the walls. She recruited friends to help fill bottles and hired a designer to come up with a logo for£25. She couldn’t afford containers and solved the problem by refilling empty ones. “In this way, we started recycling long before it became fashionable,” she said. In 2006 she controversially sold out to L’Oréal for£652 million. She said at the time she saw herself “as a kind of Trojan horse”, who, by selling to a huge firm would be able to influence its decisions.
Quote: “If I had learned about business ahead of time, I would have been shaped into believing that it was only about finances and quality management.”

Sir Richard Branson

Born: July 18, 1950, Surrey
Started in business: age 16
facts and figures: Branson’s first two ventures were growing Christmas trees and breeding budgies – both failed. It wasn’t until he left school that he began his first successful business, publishing Student magazine. In fact, he originally wanted to be a journalist. “I wasn’t interested in being an entrepreneur, but I soon found out I had to be one in order to keep my magazine going,” he once said.
He started his record business after he travelled across the Channel to buy records from a discounter, which he sold out of the boot of his car to retail outlets in London. In 1971 he opened his first Virgin Megastores outlet on Oxford Street, before launching his record label and setting up a recording studio using the money he made from store sales.
In the business’s early days he was charged with selling records in his Virgin store that had been declared exported stock and he settled out of court with UK Customs and Excise after his mother, Eve, remortgaged her house to pay for it.
The Virgin brand now boasts more than 360 companies and his net worth is estimated at£4 billion. He sold the 125-strong chain of Megastores to management last month for an undisclosed sum.
Quote: “I never get the accountants in before I start up a business. It’s done on gut feeling.”

Sir Philip Green

Born: March 15, 1952, Croydon, south London
Started in business: age 15
facts and figures: one of Britain’s richest men, with an estimated wealth of£4.9 billion, Green now controls a major slice of the UK clothing retail market.
At the age of nine, Green was sent to boarding school in Oxfordshire. He had his first taste of the retail sector six years later when he left school to work for a shoe importer.
He set up his first business with a£20,000 loan, importing jeans from the Far East to sell to UK retailers. In 1979 he bought the stock of 10 designer label clothes sellers that had gone into receivership, sent them to the dry cleaners, wrapped them in polythene and then bought somewhere where he could sell them to the public.
Green made his first million by turning around and then selling the Jean Jeannie retail business, which he bought for£65,000 and sold for£9 million. Another deal that lined his pockets considerably came in 1995, when he linked up with Tom Hunter to buy the sports retailer Olympus for a nominal sum. They sold it three years later to JJB Sports for£550 million. He bought the Bhs chain in 2000 for£200 million and the Arcadia chain in 2002 for£850 million, paying back the£808 million he borrowed to buy it within two years.
Quote: “You’ve got to love what you do to really make things happen.”

THREE OF TODAY’S TOP ENTREPRENEURS

Sarah Tremellen, Bravissimo

Age at start: 28
Start year: 1995
facts and figures: having gone up six bra sizes during her pregnancy in 1993, Tremellen quickly discovered a gap in the market for attractive, feminine lingerie for women with a larger bust.
Together with a friend, she went on a business course to learn the basics of bookkeeping, VAT returns and PR. The pair originally wanted to set up a high street store, but soon realised they couldn’t afford to buy enough goods to stock it. So, they invested£3,000 each to set up a mail order catalogue and magazine, which they ran from home.
Sending the magazine to various newspapers and women’s magazines proved to be among Tremellen’s best decisions. A double-page spread in the Daily Mail resulted in 1,500 calls in three days. By the end of the first year, 11,000 women had registered on the database and£134,000 worth of underwear had been sold. Turnover in the second year was£400,000. During the past 11 years she has delegated more and more of her responsibilities to the 380-strong team that surrounds her.
Today: Turnover stands at£29 million. Having bought her partner out, Tremellen runs the business with her husband. It is thought to be worth about£13 million, boasts a transactional web site and 13 stores across the UK.

Linda Bennett, LK Bennett

Age at start: 26
Start year: 1990
facts and figures: the founder of LK Bennett says she inherited her business nous from her retail worker father and her creative aptitude from her mother – a sculptor.
In 1990 the privately educated north Londoner set up an accessories store in Wimbledon, with£13,000 in savings and a£15,000 bank loan. Before that she studied business at Reading University. Roles on the shopfloor at Whistles and Joseph had also given her a retail grounding.
The instant success of her store spurred her on to open a shoe shop next door, thus enabling her to indulge her passion for designing footwear.
Like many entrepreneurs, Bennett attributes her success to being close to the customer. “Computers can tell you what’s selling, but they can’t tell you what people are looking for,” she said in one of her rare interviews. She won the 2004 Veuve Clicquot Business Woman of the Year award and in 2005 was named Ernst and Young’s Entrepreneur of the Year. Her shoes were even worn by Camilla Parker Bowles for her wedding to the Prince of Wales.
Today: Bennett still owns 100 per cent of the business – her sister who works for her doesn’t even have a stake. The chain has 62 stores, including one in Paris. Sales in 2006 stood at just under£40 million.

Angus Thirlwell, Hotel Chocolat

Age at start: 25
Start year: 1988
Facts and figures: it was while working at manufacturer Torch Computers, in Cambridge, that Thirlwell met his co-founder Peter Harris. Having recognised the demand for quality chocolate in the UK, they formed Hotel Chocolat – originally named ChocExpress but rebranded in 2003. The new name, he once said, is a mixture of French romance – “chocolat sounds so much better than chocolate” – and creating a “mystical place that doesn’t exist”.
At first the company specialised in business-to-business promotions, but soon developed into selling to consumers directly via mail order. From there followed a web site and in 2004 the first stores appeared on the high street. Thirlwell says authentic ingredients are the key to success – the cocoa is grown on its West Indian plantation, Rabot Estate. Passion for the product has certainly stood him in good stead. Unsurprisingly, he is a lifelong chocolate fan and admits he eats it every single day.
Today: Earlier this month, Thirlwell and Harris were both named Ernst & Young Entrepreneur of the Year for the South. Hotel Chocolat was named Retail Week’s Emerging Retailer of the Year at its 2007 awards. The business now has 22 retail outlets and a chocolate tasting club with more then 100,000 members.