Theo Paphitis’s office in Wimbledon, south-west London is not exactly a Dragon’s Den. The room has plenty of reminders of his former role on the BBC programme, including furniture made by eco-friendly venture Reestore – one of his investments on the show – and a business book by fellow ‘dragon’ Duncan Bannatyne on his coffee table. But the room is brighter and altogether more welcoming than the ominous lair in which Paphitis used to sit and cast judgement on the business plans of hopeful entrepreneurs.
The office is Paphitis’s command centre for his diverse trio of retail businesses: the stationer Ryman, home and hardware chain Robert Dyas and lingerie brand Boux Avenue. Paphitis left Dragons’ Den in 2013 to focus on growing these companies and was rewarded last month with his best ever set of trading figures. When Marketing Week arrives the self-made tycoon is in cheerful mood and keen to talk about his group’s expansion plans for 2015 and beyond.
“It’s been a mad start to the year,” he says with a grin. “I don’t think anyone could guess just how ambitious we are.”
Dressed in a trademark pinstripe suit and sporting a gold watch, Paphitis is the epitome of the businessman brand. Since finishing his eight-year stint on Dragons’ Den he has maintained a television presence by hosting regular segments on BBC’s The One Show and he continues to support UK start-ups by running a Twitter competition from his personal account every Sunday.
His media polish is evident in a one-on-one interview, though it’s also clear that Paphitis’s no-nonsense demeanour on Dragons’ Den was not just for the cameras. He speaks directly and simply about why each of his three retailers achieved healthy sales uplifts last year, with convenience and customer service common factors, and seems to revel in the day-to-day challenges he has faced since leaving the programme that made him a household name.
“Dragons’ Den was fantastic but it was right for me to say that I’ve done that now and it’s time to move on,” he asserts. “I don’t want to be known for just that. I’m a shopkeeper – that’s what I do for a living, it’s what I’m passionate about and I get as much of a kick out of doing what I do for a living as I do being on television.”
Paphitis’s retail empire has grown considerably in recent years with the launch of Boux Avenue in 2011 and the acquisition of Robert Dyas the following year. The group’s trading statement last month confirmed plans for new store openings across all three businesses in 2015, as well as a £5m investment in a new 160,000 sq ft distribution centre in Hemel Hempstead to service the group’s expanding online sales.
Ryman, which Paphitis bought out of administration 20 years ago and now has 230 stores, grew turnover by 4% to £131m in the year to 29 March 2014, with operating profit up 6% to £7.5m. Robert Dyas, which has 96 stores predominantly in the south of England, saw turnover rise by 9% to £124m and operating profit increase by 7% to £5.2m, while Boux Avenue continued its speedy growth with turnover up 50% year-on-year to £27m and its operating loss down 18% to £5.8m. The lingerie brand has 25 stores in the UK and nine overseas.
The corporate structure overseeing these businesses was last month rebranded as the Theo Paphitis Retail Group, having formerly been The Ryman Group. Paphitis explains that the rebrand, together with the new distribution centre, are part of a concerted effort to ensure resources are shared as effectively as possible across the group as it pushes for further growth.
“I still consider our businesses to be small businesses – perhaps wrongly, but that’s how I see them,” he says. “Sometimes small businesses really struggle to have the right infrastructure and quality of management in place. We’re at full capacity at the moment in existing facilities so the new warehouse will double my capacity and save me a 7-figure sum. It’s not rocket science to say you’ve got to do that.”
Paphitis’s expansion plans are a defiant challenge to the countless commentators who have foretold the “decline of the high street”. Ryman and Robert Dyas are high street chains with 120 and 140 years of history respectively, yet both have delivered strong growth in the modern, digital age thanks to a commitment to certain retailing basics: convenient locations, affordable prices, wide product selections and strong customer service rooted in staff training and internal investment.
This old school approach is mixed with an increasing commitment to multichannel retail. Although Paphitis refuses to disclose the proportion of his sales that come from online – “I’m not going to share it with you or with our competitors” – he confirms that it is the fastest growth area in the group and that mobile is rapidly becoming the dominant channel within the ecommerce mix.
The role of online is clear for a lingerie business like Boux Avenue, which has a relatively small store presence, but it also has a big part to play in Ryman’s expansion plans as the stationer looks to increase its business-to-business sales and sell more big-ticket items like projectors, filing cabinets and other office equipment. For Robert Dyas, meanwhile, online will play a key role in growing the brand in the north of the UK, where it currently has no stores, and in helping it to reach an ambitious target of doubling its turnover in the next three years (see box, below).
Paphitis was quick to notice the power of the internet following his acquisition of Ryman in the mid-90s. After consolidating and stabilising the ailing business, he launched a direct mail order catalogue in 1996 and then a transactional website two years later – moves which flew in the face of conventional wisdom that had claimed the business had no future.
“I think one bank described Ryman as ‘a dog’ when I was trying to raise the money to buy it,” he recalls. “They said that ‘the paperless office’ was now with us, so there was no reason for it to exist. What a load of balls. My vision of what Ryman would become was very much about embracing the technology, rather than worrying about it.”
Paphitis similarly doesn’t mince words when discussing the impact of digital technology today, noting that rapid changes in consumer behaviour have led to a drastic reassessment of the skills required from marketers. He points out, for example, that it is much easier for entrepreneurs to launch new ventures today than when he was starting out in business, with online channels providing immediate routes to customers and markets.
“There is no longer any point in someone saying to me ‘Mr Paphitis, I’ve got 30 years of experience in retailing’, because the likelihood is that apart from a couple of years, [most of their experience] is not going to be relevant,” he says. “I could never say that before. In the past if you had a grey-haired colleague you really relied and hung on their experience, but that’s not really the case anymore.”
Boux Avenue is a clear demonstration of Paphitis’s efforts to move with the times. He launched the brand on Twitter, without any formal announcement or press release, and has steadily grown its following by using social media and content marketing to raise its profile among women. The retailer is gradually filling the gap left by La Senza, the lingerie chain that disappeared from UK shopping centres after falling into administration last year. Paphitis owned La Senza until 2006, when he sold the business to Lion Capital for £100m.
He says the experience of launching a new brand from scratch has been exhilarating and exasperating in equal measure. Although he acts as chairman across all his retailers, Paphitis has also held executive leadership responsibilities for Boux Avenue since its launch to help guide it through its early years.
He plans to relinquish this position to a new chief operating officer in April, who will answer to the group board in the same way that the current COOs of Ryman and Robert Dyas report into Paphitis and his directors. Once the handover is complete he admits that he may look to expand his business portfolio with another acquisition.
“I’m going to be unemployed in April, so what am I going to do? I’ve got to do something,” he says. “The important thing is not to believe your own publicity; be realistic and try to stick to what you know. My success has been in the choosing [of businesses] as opposed to just the execution.”
Paphitis was born in Cyprus but moved with his family to Britain in the 1960s and settled in north London. His first job was as an assistant with a Lloyd’s broker and he later moved into property and corporate finance, setting up his own company at the age of 23.
He was drawn to Ryman via NAG Telecom: a mobile phone firm acquired by Paphitis that had concessions in Ryman stores at the time of the stationer’s administration in 1995. He also served as chairman of Millwall Football Club between 1997 and 2005 and remains co-owner of Red Letter Days in partnership with fellow ‘dragon’ Peter Jones after the pair saved the experience day company from administration in 2005.
Paphitis argues that entrepreneurs must have a burning passion for their ventures and admits he is struggling to slow down despite protests from his wife – famously name-checked during his time on Dragons’ Den as ‘Mrs P’. “My advice is always to do what you’re passionate about because you’re a long time dead, you’ll be doing it for a bloody long time, so you have to do something you’re really passionate about,” he declares.
“Mrs P quite rightly points out: ‘Why are you working so hard?’ It’s not the money – I just love doing what I do. The money is a scorecard and you add it up at the end of the year, pay your taxes on it and it’s a case of ‘the boy done good or the boy done bad’, but it’s a scorecard.”
Paphitis seeks to impart this sense of joy to fellow entrepreneurs by running Small Business Sunday: a Twitter contest started in 2010 in which Paphitis promotes a selection of promising start-up companies to his 462,000 followers each week. As with his role on Dragons’ Den, Paphitis says that such activities allow him to continually fine-tune his business instincts and keep pace with the world around him.
“Anyone who thinks they know everything is a fool,” he adds. “In today’s environment, just when you think you know what’s around the corner, there’s something else you have to learn.”
Growing Robert Dyas
Homeware retailer Robert Dyas has been one of the high street’s star performers since Paphitis acquired the business for £10m three years ago. Last year the 96-store chain grew turnover by 9% and enjoyed a strong Christmas trading period following the launch of a £1m TV advertising campaign in November.
The retailer has met a need for cheap home and garden equipment sold in convenient, high street locations, and Paphitis believes there is significant room to grow the brand further. His ambition to double the retailer’s annual sales to £250m within the next three years, as stated in a trading statement last month, will be supported by the imminent opening of a major new warehouse facility and by growing its presence in the north of England.
“The most northerly Robert Dyas stores are currently Solihull and Leamington Spa – that’s not exactly northern,” he says. “We need to get the message out there, make sure that people understand who we are and work our way north.”
In addition to new store openings, Paphitis plans to use online channels, direct mail catalogues and his own celebrity profile to grow the Robert Dyas brand across the country. Following the Christmas campaign last year he confirms that TV advertising is proving to be a worthwhile channel in helping to raise awareness. Paphitis’s lingerie business Boux Avenue also ran a TV advertising campaign in the lead-up to Christmas.
“TV is not something we used to do very often,” he says. “But the rates are a lot more affordable now than they ever were [previously] and alongside all the other media it plays a fantastic part. You have to understand the changes in media and the possibilities that are out there now, but television advertising is here to stay, believe you me.”