According to Buddhists, rebirth takes place at the end of this life. If this is true for humans then perhaps the concept stands for department stores, too. Up-market department store, Selfridges, could be regarded as living proof of such a theory for retail stores.
After a prolonged spate in the doldrums during the 1990s, Selfridges is now enjoying a new life on the high street marketplace.
Essentially Buddhist theory runs along the lines that if you have behaved morally and justly in this life, you will be reborn as someone or something on a higher plain. For example, wholesome actions like good conduct; charity and mental development are the cause of rebirth in the happy realms of gods, demigods and human beings.
If these criteria exist also for department stores, Selfridges must have been the most wholesome of all stores in its former life. And if this year’s end-of-year results published in January are anything to go by, Selfridges plc can look forward to another 100 years in existence.
The store is now performing well. End-of-year results published on 31 March confirm the success of one of the UK’s biggest department stores. Sales were up 17.2% reaching a turnover of £360m.
This compares to reported sales of £307.4m for the fiscal year ending January 1999 – an increase of 3.5% versus 1998, when the company’s sales were £296.90m.
So it has not always been plain sailing. Five years ago, Selfridges faced diminishing profits, disenchanted suppliers, worried City hustlers and in the words of finance director Peter Williams ‘a rather grotty department store’ in general.
FD Peter Williams joined Selfridges in 1991 when it was still part of the Sears group. The store was suffering from severe neglect. There was little investment and increased reticence from suppliers to display their goods at the well-known Oxford Street store.
‘The top labels didn’t want to display their products at the store,’ said Williams. ‘It appeared dowdy and unattractive to suppliers and clients.’So, faced with a radically changing retail market, Selfridges decided it was time to shape up or ship out. And so partly out of respect for the store’s innovative, rebellious founder, American entrepreneur Gordon Selfridge, and partly through innate ambition and visionary determination the former was decided upon.
Young teamA massive investment plan was developed with Williams at the helm of a young, dynamic finance team. As the Sears group slowly began to fragment, Selfridges decided to go it alone. But, before the demerger could be realised, the entire finance function had to be brought back in-house ahead of it becoming a quoted company.
In preparation for the big event, the finance team had had to complete the due diligence work required for the listing particulars and restate prior year accounts for five years to reflect the new corporate entity.
‘It was a very difficult time for everyone in the company and not least the finance team,’ says Williams. ‘In 1996 Sears outsourced all of the IT work and most of the accounting to Andersen Consulting. When Sears began to break up, the outsourcing arrangement became uneconomic. We had to bring all the finance functions and IT back in-house,’ explains Williams.
Not only were potential investors and the City highly uncertain as to what Selfridges was planning, but its own staff were too.
Selfridges had suffered a severe loss of young blood when it was decided to move the finance and IT functions to Leicester in 1996 where Sears’ headquarters are based. The London part of the operation lost some 95% of it finance and IT as a result of the move – an enormous loss of human capital.
The Andersen-trained FD and his team were determined that Selfridges should not unsettle such a large and significant part of the company’s personnel again. After considering the personnel and economic issues, it was decided to avoid a second relocation and keep the finance and IT functions in Leicester.
‘Obviously our staff in Leicester assumed we would bring it all back to London,’ surmises Williams. ‘But it just worked out much better all round that it was kept in Leicester. We spent a lot of time talking to them, explaining our expansion plans and all in all we have managed to retain all our people.’
In July 1998 Selfridges was successfully demerged from the US-based Sears Group and has since grown from strength to strength. The store’s success is reflected in the opening of a second Selfridges in Manchester shortly after the demerger. It contributed £1.3m in its first full financial year of trading. Plans for a third store to be opened in Birmingham’s Bullring Centre in 2003 are almost complete.
The design of the new store will undoubtedly surprise many. The Oxford Street store is today recognised for its classic architecture and lack of in-your-face branding. At the end of the 19th century, however, the Selfridges building caused quite a bit of controversy because it was held to be out of keeping with surrounding one-storey shops along Oxford Street.
With these points in mind, architectural group Future Systems set about designing the Birmingham store. Not to put too fine a point on it, the store resembles something out of a sci-fi film. Its organic, curvaceous form will once again make Selfridges stand out from its immediate surroundings.
‘We wanted a building of distinction,’ enthuses Williams. ‘Selfridges is slightly larger than life. We wanted the second store to stand out as much as the first. The first time people see that building they’ll go “what the hell is that?” And then they won’t forget it again.’ So confident is the company of the new building’s effect that it has been decided not to put the name on the outside of the structure.
Things are now on the up for Selfridges. Accountancy Age acknowledged the work of Williams and his team in the run-up to the demerger by naming them Finance Team of the Year in the magazine’s Awards for Excellence held last November.But Williams himself can look back at a period when, as finance director, he has been able to have an impact on Selfridges changing fortunes. Just as the role of an accountant has become much broader and more business-orientated, so too has the role of finance director.
Aside from the traditional tasks demanded of finance directors, they are now expected to be more involved in the commercial and marketing side of business. Fortunately for Selfridges FD, it is an aspect he thrives on.
‘By nature I enjoy being involved. I spend about a third of my time dealing with shareholders and media and talking to people outside the business about the business and I never did that before,’ says Williams.
Particularly in the case of Selfridges, the expansion of the FD role has been vital to the company’s successful renaissance and its first years as a listed company.
‘If the FD is promoting a scheme, that is a very powerful message to investors and shareholders,’ explains Williams.
His new role has also aided internal communication. ‘People in the company who depend on the finance function to carry out their job are more demanding. That is a good thing. If people aren’t demanding, then it’s because they are uninterested or not doing their job properly.’
Bigger pictureWhile Williams’ job has taken him slightly away from the traditional role of finance director, it has allowed other employees to develop their skills and extend responsibilities. Phil Clark, finance controller in London, now chairs the Monday morning trade meetings, a responsibility that usually lies with the FD. The meetings, which include senior people from the buying and operation teams, not only offer great opportunities for the finance team to contribute to the commercial aspect of business, but create an environment of participation and communication as well.
Still, the success story does not end there. Besides the six or seven other stores Selfridges plans to open throughout the country once it has obtained suitable sites, a development project is underway at Oxford Street to further maximise on the store’s ideal location.
Good footingThe side and back of the Selfridges site is relatively underdeveloped. At present it contains a car park and hotel that bring in a modest income for Selfridges. A footfall study carried out by University College London established that the corner of Oxford Street and Orchard Street – essentially the side and back of Selfridges – was the area most walked over area in the UK. The survey showed that on average 15,000 shoppers per hour tread this path. ‘In terms of foot fall it is the best site in London and probably one of the best sites in Europe,’ says Williams. ‘There’s no problem in getting the people around our store.’
Selfridges immediately set to work with the help of property developers Jones Lang Lasalle to develop a strategic plan to bring out the potential of this part of the store.
‘We would put the car park underground. We want to extend the retail sections on ground, first and second floors,’ says Williams throwing ideas around. ‘The reason why we think we can do this is because, certain sections can benefit from more space, especially the food and sports areas.’A development partner still has not been selected, but big plans are afoot. And the FD looks set to continue his proactive role.
The rise and rise of Peter Williams
Although he comes across as a modest person, the Arthur Andersen-trained chartered accountant must receive a large chunk of the credit for the store’s successful comeback.
Since becoming a fully-fledged chartered accountant in 1978, Williams’ career has been largely founded on the retail industry. In 1987, after a stint in the electronics sector, William became finance divisional manager at Freemans plc, home shopping retail. As well as managing 150 staff, Williams increased the company’s debt recovery rate by 5% of gross debt. He also established the training scheme for graduates through CIMA.
In 1991 Williams joined Selfridges Retail as finance and strategy director. It was in this role that he led the debate on the need for a long-term strategy concerning the development of more stores. As a result of these discussions and strategy meetings, Selfridges opened its second store in Manchester in 1998.
As the role of FD began to change in the late 1990s, Williams became responsible for liaising with shareholders and retail analysts. He played a vital role in the demerger project team, which successfully fulfilled all the London Stock Exchange, legal, taxation and financial requirements. With his new responsibilities to woo investors and shareholders, he was able to arrange long-term funding for Selfridges plc.
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