Profile: Richard Mayfield, Waitrose FD

Richard Mayfield, Waitrose FD

When it comes to coveted executive roles Richard Mayfield arguably has one of the most desirable right now. Not only is he finance director of Waitrose, grocer to Britain’s middle classes and part of their other favourite store group, John Lewis, but he runs a business owned largely by its staff rather than angry shareholders, and one which can boast being whiter than white when it comes to its ethics.

In a downturn the difference between being a plc FD and an FD role in a partnership come into sharp relief. In the current climate Mayfield, 40, is more than happy to savour many of them.

Of course, there are more similarities between the two roles than differences, but what’s keeping Mayfield awake at night is more likely to be his 18-month old baby rather than what’s bothering his fellow public company FDs. He’s definitely not worrying about where next to swing his scythe or which project to ditch.

Neither is he the only FD to be content in a non-plc role at present. Last month Jason Gissing, finance director and marketing director of Ocado, in which Waitrose has 24.1% shareholding, recently said: ‘It is a
thankless task to be finance director of a public company in the UK.’

Mayfield says: ‘For a downturn, it means we are less likely to stop long-term growth and development activity that we have embarked on. We might think about focusing it but we’re not going to stop it. The other thing is how we drive efficiencies through the business. We are likely to take a more considered view. We’re unlikely to just take heads out of the business.’

There are no plans to reduce headcount at the supermarket chain. On the contrary Mayfield is looking to beef up his finance team, which numbers 150; a considerably small figure when you consider B&Q’s, also a £4bn turnover business, boasts around 250.

Not only is he continuing to recruit, but together with Marisa Cassoni, finance director for the partnership and Sharon Flood, FD of John Lewis, Mayfield is leading a root-and-branch financial transformation project, which involves redesigning standard financial processes across the whole group and implementing a new IT system.

Trailblazing

Through the financial transformation project, finance is in fact acting as a trailblazer in terms of cross-divisional working, something that Mayfield says will become more common at all levels across the partnership.

‘A strength and weakness in the partnership is the degree of independence and divisionalisation of authority. It’s very positive in the sense that most of the important decisions get made close to the customer,’ Mayfield says.

In fact each business in the group can authorise any project up to the value of £20m; typically group divisions have the power to authorise projects up to around £100,000.

This separation between the businesses is set to end in terms of procurement ­ especially of non-saleable goods such as steel and paper ­ where the partnership as a whole can gain more leverage and make significant savings.

‘We will need to do more of that across the partnership. We [John Lewis] are a £7bn turnover partnership and in many areas we aren’t taking advantage of that,’ he says.

Mayfield, who qualified with Ernst & Young in London, doesn’t just know Waitrose well, he is well inducted into the whole ethos of the partnership having joined in September 2002 as the partnership’s head of financial analysis. He moved to the supermarket division in September 2003 as head of finance services, becoming FD ten months later.

In fact when he took on the role of FD the finance function had only been in existence for 12 months. The shape and efficiency of the function is something he’s proud of.

‘It’s still a journey but here finance is now a business partner. It’s a cultural journey,’ he says.

Despite not having to deal with short-termist shareholders, Mayfield would argue that he faces much closer scrutiny from the group’s staff, who perhaps don’t have the sophisticated knowledge to analyse the financial performance of the business, often know more about what’s going on and why.

‘In one sense you could argue it’s harder because people might believe that the imperatives for a plc are simpler ­ it’s basically generating value for shareholders. The partnership’s constitution is much more complex,’ he says.

There’s no denying the success of the partnership model in recent years and its constituent businesses. Waitrose sales have grown by 47% in four years with its market share increasing to 3.9%. Gross sales are up £251.6m, 6.8%, to just under £4bn, while operating profit rose to £38.3m, up 22.0%.

Growth rates

Waitrose isn’t immune from the squeeze on credit and the imminent recession, Mayfield acknowledges that this year and next underlying growth rates will be less than in recent years. Last year saw the supermarket chain grow at 7% and for the four previous years the business was growing at around 10%.

Yet, because of the lack of pressure to hit short-term goals, the prospect of a recession ‘doesn’t change our view on development or growth potential’. There’s less room for manoeuvre in terms of the capital available, but Waitrose is conservatively geared so the business will need to be just as conservative in picking its opportunities for growth.

Still, Mayfield says plans are ongoing to introduce smaller formats for Waitrose stores ­ a policy that has served Tesco well.

Although the organics market may well be one of the first victims of the downturn, Waitrose has no intention of reducing its offering. Waitrose’s share of the UK organics market stands at over 18%, with market share for Fairtrade items at 8.6%.

Waitrose stole a march on its rivals in the organics market when over seven years ago the supermarket began stocking local and regional foods and now boasts over 1,400 regional product lines in its shops throughout the country. Last year the supermarket saw around 60% growth in its regional food lines.

Mayfield won’t be wholly drawn on whether in the future he would consider a role with a business that has a less ethical stance than Waitrose. It would be perhaps unwise to rule out any such roles given that few businesses have such an established vision on and reputation for ethical business as Waitrose does.

Nevertheless, he is passionate about the brand and food in general, which shows through when he talks about Waitrose’s ethical credentials, compared to its competitors.

‘We underplay our strengths. We’re whiter than white about telling the truth. There’s been a lot of noise about eggs in the past 12 months. All our egg products are free range but our competitors make claims about eggs in a way that leads consumers to believe all egg products are free range, when they aren’t. It’s not ethical. They are taking advantage of imperfect information,’ he says rather passionately.

For now the FD can remain confident that his plans for transformation and growth in the business are on course despite the depressed economy. But with Mayfield’s credentials he will get to experience some of the pain those plc FDs are going through right now.