Retailer Opinion: David Robertson of JP Pozzi

When I was at Uni some 20+ years ago I shared a room with a guy who went on to become a very good friend.

I have many, many stories of those days, but perhaps the thing that sticks most vividly in my mind was Harry’s love of music – everything from The Eagles to Doris Day, Sinatra and the sweeping country tones of one Kenny Rogers.

‘The Gambler’ became, and still is, my karaoke tune, and in what has been a difficult few weeks for me recently the song has been kind of stuck in my mind.

The song tells the story of a train journey and a gambler giving a troubled soul some advice. He professes that every gambler knows:

‘You’ve got to know when to hold ’em

Know when to fold ’em

Kenny Rogers’ The Gambler – David’s karaoke tune.
Kenny Rogers’ The Gambler – David’s karaoke tune.

Know when to walk away

And know when to run

You never count your money

When you’re sittin’ at the table

There’ll be time enough for countin’

When the dealin’s done

 

That the secret to survivin’

Is knowin’ what to throw away

And knowin’ what to keep

‘Cause every hand’s a winner

And every hand’s a loser

And the best that you can hope for is to die

in your sleep’

 

What bet will you lay? As we start 2018, many of you reading this will be questioning what bet you want to lay next. Many indie retailers will have faced a difficult 2017. The drop in footfall, rise in core costs, lack of innovative product (cards being an exception) and the continual rise of the internet retailer have all squeezed our margins and in truth have probably squeezed our spirit even more so. These are difficult cards to deal with.

We are all playing with a public that doesn’t know when to buy as there is always a deal, always a discount. We have a public that is being brainwashed by the internet. Every store assistant these days seems to utter the line ‘you can get it online’, and the stores themselves are shedding buildings and staff at a frightening rate of knots.

There are exceptions as there always will be. Niche players, the destination garden centres/themed stores, multiples with better margins, and those who are willing to adapt and change their strategy will survive. However those in the middle may well have to fold and go out of business or, if they are lucky, sell out to someone who can make it work.

Is this negative? The basic facts are we can’t all be shiny happy people. I am renowned for telling people as it is, often to my own detriment, and this is how I really feel so I write it here so that people perhaps realise that they are not alone.

 

A business’ evolution. Every business I believe has a historical arc. This arc charts the history from its beginning through its development to its successes and possibly ultimately its demise. That arc might start with one person and end in a sale to another, or it may end the way it began, but each arc is unique and this is without doubt the most interesting part of any business.

I am fascinated by why some businesses survive, some fail and some really never amount to much. In some cases survival and just ‘getting by’ is the name of the game. For a great number of small businesses that is enough, but for me that struggle or return on investment would simply not be worth it.

Longevity in business is a relative concept, its importance is determined by the industry sector you are in and the type of business you are running.

At around 220 years old, Johnstons of Elgin is still going strong.
At around 220 years old, Johnstons of Elgin is still going strong.

Close to me we have an institution of British manufacturing called Johnstons of Elgin. This 220 year-old business has just secured the Walpole award for its commitment to British manufacturing. Johnstons as a business takes the very best of raw materials (cashmere) from around the world, its finished product sits alongside other luxury brands such as Bentley and cutting-edge businesses such as Farfetch.

Under the current leadership the company is transforming into a fashion house in its own right while nurturing long-term business relationships with Hermes and Mulberry, to name but two. Johnstons’ age is key to its story, but equally its willingness to change has resulted in it being more relevant than ever.

Other industries, such as technology, often rely on shorter lifecycles linked to the pace of innovation. Nokia was once THE name in phones but now you rarely hear it mentioned. These companies burn bright, go on and hot streak and then fade.

 

Then what are we? Most of us indie retailers are really just middle-men who don’t create or innovate. We simply resell for profit. This is perhaps the most difficult thing to grasp as this makes us the most vulnerable. Indeed, most high street retailers fall into this category and this is what makes us transparent and at risk to companies selling direct, usually online.

Perhaps 2017 didn’t see such big retail losers such as BHS, but we have seen bank after bank announce closures from our high streets.

In December the wholesaler Palmer & Harvey went bust after 90 years of trading, Toys R Us pulled the plug too on many of its stores, and other national stores are looking to reduce their high street footprint. We have seen the emergence of vaping shops, ironically yet more bookmakers, and the continued rise of coffee shops as the supposed secret to all retail and footfall problems on the high street.

The appearance of coffee shops has continued to rise on our high streets.
The appearance of coffee shops has continued to rise on our high streets.

So where does that leave us? Well, if you have maybe one or two stores in decent locations that you own or are not too expensive to rent with a good regular local trade you will survive. How much you can actually make is open for debate, but let’s get one thing straight, each year is going to be more of a struggle. Every April that Living Wage cost is going to rise and with every day the legislation and staff issues you face will get more complex.

In the greetings industry’s land of the multiple it is a mixed bag, with value retailers such as Card Factory, The Works and Cardzone aggressively opening and being driven forward through sure fire ‘bets’ (offers). They are experienced operators who know exactly what does and does not work, who can hold their nerve and can afford to lose a hand or two and still trade very profitably.

Whereas middle ground operator Clintons, in effect is without doubt still vulnerable, and there are always rumours of what is happening at other smaller card retailing groups.

 

So, the interesting question is of course is how long is too long? At what point should you fold your hand and stop retailing? And, will anyone even care if, for example, Card Factory closes its doors… other than the guys that are making the money from it? Will it leave a legacy on the high street? When does a company become part of the community? I would say rarely.

A few weeks ago, 17 year-old ASOS hit the jackpot and eclipsed the market value of 133 year-old Marks and Spencer. This really is crazy, but it is a fact. What is even more incredible is that M&S’ new chairman Archie Norman described it as drifting for 15 years, maybe more. How on earth can that happen? Of course it is not just M&S, Tesla overtook Ford and Amazon is worth nearly twice as much as Walmart, and this is just the beginning.

The January Blues are often discussed and it is likely that some among us will lack the fight or funds for another year ahead. January should always be a month of new hope, of wishes and dreams. Most gamblers are eternal optimists but I, like most of you, will wonder what is to come. I must admit for the first time in my business career I have started to ask myself further questions: Will there still be retail in 10-15-20 years? Will commercial properties hold any real value if city centres continue to face a downturn? Will Alexa or Siri or Echo simply get what we command and continue to bolster the bottom line of Google, Apple or Amazon? Will shops become pretty much obsolete before returning as a cool trend a bit like vinyl records?

Last year we embarked on a massive year of investment and change, taking our core business and upgrading and moving it on to the next level. We took risks and placed bets on physical and stock holding changes. In truth, this was a complete re-imagination of our original building, with new branding and look to all our stores.

We invested a huge amount of ourselves to make these buildings a success, never mind the money that went with this to hopefully make it a winning hand.

 

David Robertson with his parents Lynda and James Robertson in a revamped JP Pozzi.
David Robertson with his parents Lynda and James Robertson in a revamped JP Pozzi.

A parents’ gamble.Why? Well our arc actually is 30 years-old this coming June.

My parents’ gamble was simple in 1988 – buy what was a very old-fashioned newsagent, turn it round and then sell it, using the money from the sale to retire. This was against massive odds of 15% interest rates!

My plan has been to buy and invest heavily in my shop buildings, making them the best I possibly can. In this sense I am all in, basically hoping that they will be my pension or realise the best price when I do decide to cash out.

So if you feel like this when should you sell? Well there are a million reasons. It may be you have taken your business as far as you can or as far as you want to. It may be that you want to walk away like ‘The Gambler’ and collect on all that blood, sweat and tears. It may be personal circumstances such as illness or simply a change of pace of life that dictates a sale. What is without question is you should try and sell on the upslope or, as things are, at least steady. You also have to be able to let it go without a feeling of guilt or regret. No what ifs! Hold your nerve and don’t let your eyes betray you.

Now selling is not an easy thing. I considered it before the complete reinvention of our stores, but ultimately I am not ready to step away from this gambling table. I may have taken a suspect shuffle of the pack, I may be carrying a few knocks, but I have a lot of fight in me with lots of opportunity to get better at what I am doing.

How will you play your cards in 2018?
How will you play your cards in 2018?

 

What is my end game? God knows but what I do know is that I will keep striving because the freedom and satisfaction of the risk is something that is addictive and hard to replicate.

Ladies and gentlemen may all your gambles in 2018 pay off handsomely!

* This article appears in full in the January edition of Progressive Greetings Worldwide, in which David writes a monthly column.

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