The green agenda

If I play table tennis with my kids, I don’t give them a start. Never have – I play to win.”

There are dozens of textbooks on what makes a great retail leader. Not many of them mention table tennis. But Sir Philip Green’s anecdote typifies the tycoon, whose relentless quest for pre-eminence has transformed the balance of power on the high street and made him richer than any of his retail contemporaries.

The billionaire fashion boss was musing on success ahead of taking part in a session on retail leadership at this week’s World Retail Congress in Barcelona, where he was also being inaugurated into the Retail Hall of Fame. “Where I started, I got no different opportunities to any other 16-year-old,” he says. “It’s the will, it’s the drive, it’s the interest, it’s the energy – it’s wanting to win.”

Competitiveness is at the heart of everything Green does and his drive and enterprise is needed more than ever now, as the weather and falling consumer confidence conspire to make fashion retail even more cut-throat than usual. “I’ve known it easier,” he says, with rare understatement. “There’ve been easier moments.”

But, while times may be tough, Green is not showing any signs of feeling the pressure. Meeting Retail Week in his sixth-floor office overlooking Oxford Street, he is carefree and mischievous, cracking jokes and seeming to relish the intellectual challenge of a tougher market. Rather than moaning about market conditions, he thinks this is the time when his hands-on approach to business comes into its own.

“We’re not a business that’s got an absent landlord. We’re on it: talking to the teams, going slightly lower down where necessary, sitting with the people, looking at new ways of doing business; you know, evolving. It is what it is. There’s no point getting annoyed – if it’s snowing it’s snowing.

“It’s saying: ‘What can I do that’s different?’ You might find a way to take a week out of your stock, get some new merchandise – you’ve got to be thinking all the time about what can you do to service the customers that are out there, that are going shopping. What can you do about your environment, your window, your store, what are the levers you can pull to maximise any opportunity that there is?”

What Green would call his hands-on approach, some interpret as intimidating, but he insists that he avoids confrontation. “The reason I’ve avoided being in litigation my total career – either suing or being sued – is that I like the word compromise. Contrary to what people might think, I might have a scream-up but it’s gone after five minutes and I get on with the rest of my life,” he says.

Unlike many in fashion, Green does not subscribe to the gloom-and-doom scenario that the market is on the precipice. In fact, he says his young fashion brands are doing better than the more mature brands, and that Topshop – and Topman in particular – will have their best years ever in 2008. Speaking last Thursday, he was non-committal on the broader outlook, but believes the next month will be crucial in determining just how challenging conditions are going to be.

“Based on Easter being the earliest for 100 years, every single retailer knew April was going to be hard. This day last year was 17 degrees; now we’re going into the weekend forecasting snow. If you open your door in the morning and there’s a blizzard, you’re not going to buy a summer dress. That’s just basic common sense.”

While the fortunes of the Arcadia fascias are proving mixed, Topshop has cemented its place as the UK’s most fashionable high street brand. With the phenomenal publicity around the launch of the Kate Moss range under its belt, and the opening of its debut store in New York looming this autumn, the brand has moved onto a different, and global, plane.

Green remains undecided on where Topshop will go after the US launch, but he knows the stakes are high. “The thing everybody keeps telling us, and the thing we’ve got to be careful about, is not to Americanise it,” he says. Pointing towards the Oxford Circus flagship, he adds: “We’re going to pick up that store, slightly smaller, and transport it – and keep it English, what we do well.

“Is [succeeding in New York] a given? No. Nothing’s a given in retail. Will it be easy? No. It’s not 200 yards from our head office. That store gets three deliveries a day, gets 100 to 150 styles every two weeks. The logistics of us learning how to execute across the pond are going to be somewhat more difficult. But, if we want to be a global business, we’ve got to be able to perform in America.”

The uncertain state of the US economy means that Green is guarded about further expansion beyond the New York flagship. “We have to decide, do we have n number of flagship stores and maybe do something with a couple of department store chains?” he ponders. “It’s not an emergency: I think we’re going there from a position of strength and therefore we’ve got time to find our way carefully.”

But Green clearly sees Topshop as destined to become a global superbrand and, while he feels that the explosion of Western retail in developing markets won’t happen overnight – he describes India and China as “five, 10-year plays” – he reels off a list of future destinations for the brand. “We’re looking at India, got meetings there in four weeks time. We’re discussing in Hong Kong, discussing in China, going very well in Russia, just started loose conversations in Brazil,” he says.

“We’ve had interest in South Africa and Australia, we’ve got someone going to Milan this weekend to look at two sites and we’re still interested in Paris.”

A crucial part in reinforcing Topshop’s status as a global leader has been the Kate Moss range. The fifth collection launched last week in 80 stores and online, and Green says it is now a stable part of the business.

“We’ve got it into a sensible place. We got a few things right, a few things wrong, but we think we know roughly what the capability of the brand is without saturating it,” he says.

He enjoys working with Moss, who is becoming more engaged with the brand as time goes on. “She’s got more into it. She came in last week, wanting to go through the sales, what’s selling,” he says.

Green might be known as a technophobe, but Topshop has adopted its younger demographic’s love of the web with zeal. At the same time, while he claims to be unsurprised at how the web has caught on, he rejects the view that it is going to obliterate the high street.

“Everybody today from 10 or 12 years old is computer-savvy. I see my daughter sitting there with her mates: they’re looking at stuff, but they’re going shopping as well,” he says. “I think it will settle down. Shopping is a way of life. I don’t think it [online] is going to be more than 5, 6, 7 per cent of our business.”

But, while Topshop grabs the headlines, at the other end of the glamour scale is what has probably been Green’s biggest headache – Bhs. The problem, Green says, has been space. “We didn’t work the space we have hard enough, because the gross-to-net ratio has always been poor, and we need to be opening eight to 10 stores a year – we didn’t do that,” he says.

“All my competitors have opened a lot of space. The out-of-town British Home Stores business is doing well, but we should have opened another 50, we should have got there slightly earlier.” He says that the refitted Bhs stores are doing well and that, by the end of May, 35 will have been completed. “We’ve got a good balance sheet, virtually no debt, but we’ve got to grow the business,” he affirms.

GREEN'S WAY OR THE HIGHWAY

Whatever happens to his businesses, though, Green will do it his way. Today’s head offices often house as many advisers as retailers, and the chief executive of a quoted retailer is as likely to have been a management consultant or an accountant as worked their way up from the shopfloor.

It’s not a trend that Green welcomes. “I wouldn’t know how to spell consultant. It’s not a word I use,” he says. “On the basis you’ve got to go outside to get a consultant, that would be quite worrying – that we don’t have enough ideas ourselves. That doesn’t mean we’re not open to new ideas – nobody is more interested in new ideas than me – that’s different to some fellow saying let’s put some brown tracings on the wall and go out into la-la land.”

A thread that emerges time and again is that Green does not like external interference in his businesses. At a time when friend and competitor Sir Stuart Rose has been going through the mill over corporate governance, Green is glad it is not a world he is involved with.

He says: “I decided a long time ago that’s not a place I want to be. Not everyone can be a private owner, so I’ve been fortunate in that respect. It does take up time, having to be accountable to other people who are not in the everyday thrust and don’t understand what the issues are. It’s an added stress.”

Another source of external pressure has been the attacks from the national media and pressure groups over factory conditions, which have grown over the past year. While he has not had the high profile of other major retailers such as Rose on the issue, Green is defiant that his businesses are playing their part in improving things and is dismissive of the ever-more vocal lobby groups.

“I can look in the mirror, ask: ‘Are we doing it correctly? Are we doing our best? Are we conducting our business properly?’ The answer’s: ‘Yes, we are’. We talk to these different faction groups, but you invite them in and they don’t pitch up, because that would be the end of their movie,” he says.

The increasing pressures on retailers intensify the need for quality people to come into the sector, which was what prompted Green, in conjunction with other big retailers, to set up the Fashion Retail Academy. The first years have inevitably not all been plain sailing, but Green is still hopeful that the academy will produce the stars of the future.

“To get what I would call a champion-league crop, you need two or three years to start to see. It’s a learning curve of seeing what you can do with these people,” he says. “We’re looking for multi-skilled all-rounders. There aren’t going to be dozens, there’s going to be a few.”

Having that instinct for the business is, Green says, crucial and, despite his deal-making reputation, he bristles at any comparison with private equity merchants who buy and sell retail businesses for a quick profit. “I was fortunate that I’ve managed to do things under the radar two or three times. I think I’ve demonstrated that things that I’ve bought, I’ve stuck with. I’ve gone on with what I’m good at.

“If you look at the profitability of both groups today in the textile business, I’d be shocked if they weren’t up in the top three, four, five in the world in terms of return on capital. There are not many businesses that earn several hundred million pounds that are not debted off the planet, and still got all the assets you started with.”

He adds: “Oxford Circus is probably one of best retail sites in the world. We still own it. We could have sold it, but that’s not ever been my strategy – my strategy’s been to make the businesses work efficiently and work well.”

ALL IN THE TIMING

The secret, he says, is timing. “It’s all in the timing, and my timing was particularly good. In 1999, every VC was saying: ‘Retail – are you crazy?’ What about Sears? Then 2000 – Bhs, nobody wanted it. Everyone said it was a dog. In 2002, Arcadia was in recovery. By the time I got to 2004 and I wanted to do M&S, it was: ‘This bloke’s made too much money, he can’t be allowed to do that.’”

He is at pains to point out that he has preserved employment in the businesses he has bought and, although hands-on, he also works in a collegiate way, “mentoring and supporting, rather than just telling people what to do”.

There have, of course, been setbacks along the way – most notably Green’s problems at Amber Day – but he says it is all about picking yourself up. “You’ve got to have disappointments to enjoy the success,” he argues. “My road hasn’t been a straight run from a to z, there’ve been a few bumps. You’ve got to dust yourself down and move on.

“After Amber Day, a lot of people might have jumped out the window. I went home at 6 o’clock in the morning, having been up all night, had a three-hour kip, went back to the office and carried on.”

And, despite the challenges, there is, he says, still room for innovation in the retail business. Although he describes much of the high street as “samey”, he singles out the rivals he admires most as Zara – “genius, what the fashion industry is all about” – Crate & Barrel and River Island – “When you go out and create another brand after one successful brand, you’ve got to be good at it.”

And what about his own future? It may not be much fun selling clothes right now, but Green’s passion for the fashion business shines as brightly as ever. When he goes, it will be on his terms.

“I’ve got a good balance. In the nicest sense, my work’s my hobby. It’s what I love doing. I go into the buying office and still think I can pick as many winners. You can’t learn to do that, you’ve got to have a feel. As long as you can enjoy that part, that’s the real engine room of the business,” he says.

“Once you don’t want to do that, once I want to do the finance and tinker with bits of paperwork – no,” he says, shaking his head. “If I woke up one morning and I hated it, it’d be over, finished. It’d be goodnight. And it would be worth what it would be worth. I wouldn’t torture myself. That’s not what I plan doing.”

It’s evident that Green does not expect to be off anytime soon. As he puts it: “What else am I going to do every day? Aggravate myself?”