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Theo Paphitis: ‘It feels like retail is now closer to the precipice’

Theo Paphitis: ‘It feels like retail is now closer to the precipice’

Like any other disgruntled constituent, Theo Paphitis often takes his problems to his local MP. It just so happens that the Member for Runnymede and Weybridge who listens while the former Dragons’ Den star gets something off his chest is Philip Hammond, the Chancellor.

Handy when you consider the entrepreneur’s biggest beef is the unfairness of business rates which pour close to £30bn a year into Treasury coffers but are routinely blamed for squeezing the life out of Britain’s high streets.

“We’ve had words in the past but we are still talking which is important,” says Paphitis, whose empire stretches across the Ryman stationery chain, homewares retailer Robert Dyas and Boux Avenue, a lingerie seller.

After last week’s Budget, the words may be choicer next time. Although Paphitis says Hammond is an “incredibly sensible guy”, he is angry that he did not go further while stood at the Dispatch Box.

“Anyone that knows anything about retail would tell him that this minor relief to our industry will make no difference to the continued demise of the once great British high street,” Paphitis says, lambasting plans for temporary rates relief for small retailers and restaurateurs plus a £675m “special projects” fund. “The Chancellor was quick to tell us retailers that times are changing and we should adapt accordingly. I, and no doubt many others, found that particularly insulting.”

The tycoon is even less charitable when it comes to Sajid Javid, the Home Secretary, who as local government secretary reviewed the business rates system but kicked any changes into the long grass.

“What a halfwit,” Paphitis labels the man some regard as the next prime minister. “Why would you go into politics if you don’t want to make a difference? It is not just him, there are lots of them guilty of it. No one is doing anything about it (business rates) because it would involve putting their bum in the bacon slicer.”

Such blunt language is not uncommon from the self-made businessman who left school at 16 and whose fortune is now estimated at £300m. In last year’s annual trading statement for the privately held group, Paphitis warned that “it really does feel like retail as we know it is creeping closer and closer towards the precipice”.

Toys R Us, Maplin, Homebase, New Look: the numerous failures and store closures this year offer plenty of evidence of the tough times that shopkeepers are enduring.

There are higher costs of course, including the minimum wage and rents. The consumer is also feeling the pinch after a World Cup-inspired spending spree petered out in September. But Paphitis, tanned and wearing a bright checked shirt, is laser-focused on business rates.

The tax on the physical stock of property, regardless of how efficiently it is used or how much revenue it generates, tips the balance heavily in favour of internet retailers that trade from giant warehouses instead of those that choose to maintain a high street presence.

So what about the digital services tax on revenues from search engines, social media platforms and online marketplaces that the Chancellor also unveiled and is forecast to bring in £400m by 2022? Paphitis dismisses that haul as “likely less than the digital big boys spend on their staff’s skinny chai lattes”.

He favours a transaction tax for both physical and online retailers. What he proposed six years ago would have raised 14pc more than the amount business rates was bringing in, he calculates. “The fact is when you have a cake that is shrinking your take shrinks,” he says. “But on the other side there is another cake that is growing vastly.”

Never mind the northern town centres struggling along with 30pc vacant retail sites. Paphitis says he can see the impact of the Government’s failure to act on his drive to work every morning from leafy Weybridge in Surrey to his Wimbledon base in south-west London.

“A lot of properties are boarded up and sheltered housing is being built. Is that what we are really going to do, make every high street into a retirement village?” Paphitis employs 170 people at his headquarters and more than 4,000 staff overall. Some lunchtimes he exercises Gladys, his cocker spaniel, on the common.

Born in Cyprus, the entrepreneur arrived in the UK with his family aged six. School was a struggle. His dyslexia was detected late and only a job in the tuck shop provided a bright spot. “It allowed me to shine and allowed people to see that I wasn’t stupid – there was something worth salvaging here”.

That love for retail was revived a few years later when he became a sales assistant for Watches of Switzerland in London’s Bond Street. “I remember going home and saying to (his wife) Mrs P it was fantastic and I couldn’t wait to go back the following day.”

He made some money in commercial property that enabled him to return to the industry by a circuitous route. Ryman had fallen into administration in 1995 and Paphitis, after working on some earlier turnarounds, seized his chance to acquire it.

Because the paperless office revolution was meant to be just around the corner, sceptics said the business was doomed. Paphitis thought otherwise. “In those days we sold typewriter ribbons and things like fax rolls. We had to move with the times so we replaced ribbons with ink jet cartridges at 10 times the price.” Last year the chain made an underlying profit of £10m.

Ryman provided a template as Paphitis developed a reputation for buying businesses out of administration. One of the first times I encountered him was in 2005 when he acquired, along with fellow Dragon Peter Jones, Red Letter Days, the gift experience company he discovered was in financial trouble after reading my coverage.

That takeover was particular piquant because the venture had been owned by a third Dragon, Rachel Elnaugh. Having become profitable, it was sold on last year.

“If you buy an asset for the wrong price in the wrong way you are going to struggle to turn it around,” he says, sipping a glass of red wine. More importantly, don’t buy an asset with a view to selling it on, he advises.

“You have got to buy it and assume you are going to have it forever. Treat it like that from the very first day. Don’t buy it private equity style, bump up the profits and cut the costs to zero. If you treat people like rubbish, guess what happens? Rubbish.”

Boux Avenue was different. The lingerie chain was the product of a team drinking session in 2009, three years after he had exited La Senza and Contessa.

“We were complaining about La Senza and Marks & Spencer and started sketching out the perfect lingerie store. Apparently I agreed to fund it, or so they told me the following morning.”

Boux Avenue launched two years later in the teeth of the recession, which meant Paphitis could pick up some cheap sites. Today, it has 30 stores and turns over £50m.

What is consistent throughout his story is how he makes sure his people feel part of an enlarged family. Recently, 500 staff convened in Birmingham for the group’s annual conference where Paphitis, 59, dressed as the ringmaster from The Greatest Showman movie.

Dragons’ Den – where budding entrepreneurs pitch their ideas to five veterans in the hope of winning financial backing – made him more famous than his retail brands, something that hasn’t done business any harm in the long term even though he left the BBC Two show six years ago.

“If it’s on it’s on, but I don’t make a point of sitting and watching it,” he says. “The fact is it simplifies what business is all about. It is so much common sense.”

If only ministers could have a dose of something similar the next time they consider how best to help out the UK’s retail scene.

Theo Paphitis on 125 years of Ryman

In 1995 when I was looking at buying Ryman, and approaching private equity businesses and banks to raise the money, I was told it was a dog of a business; that I was absolutely mad to even look at it, let alone consider investing in it. Why? Because the paperless office was the future and no one was buying stationery anymore.  I knew they were wrong then, and that’s why nearly 25 years on since I bought the business out of administration, Ryman is now marking its 125th year of business and doing well. Not a mean feat in the shifting plates of the current retail marketplace and a credit to the teams in store and across the business.

In 1893 there was the panic on the New York stock exchange, Beatrix Potter created Peter Rabbit and Henry Ford designed the first gasoline fuelled engine.  It was also the year that Ryman opened on London’s Great Portland Street in October, an iconic road it still resides on today, even after a number of relocations throughout the years!

Ryman has grown and we’ve acquired some friends along the way.  In 2001 we bought 86 Partners the Stationers stores and in 2007, 61 more via Stationery Box.  This created the portfolio we know now, of over 200 Ryman stores across the UK. Our latest acquisition was the iconic arts supplier brand London Graphic Centre in 2016…all helping people tackle that ‘paperless’ office head on!

At Ryman we recognise and value the heritage of the brand and that we are the custodians of it.  After Henry J Ryman, I am the business’s longest owner, and have a responsibility to its history as well as our colleagues.  

It will inevitably be survival of the fittest, through hard work and relevance.  Brands that don’t rely on just one aspect of their businesses, but instead ensure that the technology supports the stores, that the product and the price points are right, and most importantly that customer service really is excellent.  When your store colleagues care enough to make your customers feel special, an experience in itself, and want to return to buy, you can hand on heart recognise why there is life in the old dog yet.

As business owners we must understand why we exist.  Ryman used to sell fax rolls, and now it sells plain paper for printers.  It used to sell typewriter ribbon and now it’s ink cartridges. We now help our B2B customers in a more bespoke way and have introduced services for increased convenience for our customers and to meet demand.  Ultimately, we must give our customers what they want and need now, not what we’ve always given them – or someone else will.

The high street is under pressure, but hard work, investment and relevance are what will ensure that retailers, like Ryman, stay on our high streets for the foreseeable future; important to the economy and people’s livelihoods.

To ensure the high street remains right in the heart of our communities the Government must help the whole industry through retail-friendly policy.  They must address the Business Rates elephant in the room; the unfair taxation of the shrinking physical retail cake as opposed to the rising digital cake.  The future of retail depends upon it.



Theo chats to BBC Breakfast and BBC 5 Live’s Wake up to Money about dyslexia

On 15th October Theo spoke to BBC Breakfast TV and BBC 5 Live’s ‘Wake up to Money’ show about how having dyslexia has brought about his success.

A report released by charity Made by Dyslexia, showed that 40% of self made millionaires are dyslexia but yet only 4% of the public think that having dyslexia is a positive trait. The report also said that people with dyslexia have a “unique set of skills”.  These include reasoning, communicating and visualising – all identified as key attributes for a modern workforce by the World Economic Forum.

Talking openly about the difficulties he faced during his years at school, Theo spoke about the benefits it has brought about for him in later life:

“For me dyslexia was an advantage, as painful as it was…If I hadn’t had dyslexia I’m pretty certain I wouldn’t be here today because I wouldn’t have gone down the path I went down.

“Even as an 11-year-old I remember quite clearly learning to get round the things I had to do and finding another solution. Whatever it was I had to find another solution.

“It really gave me that confidence to be able to tackle anything in business, but not from an arrogant point of view or a false confidence, but how hard can it be? To look at the problem, break it down find a solution.”

He added: “I think the early years of dyslexia, where you learn to deal with those issues, are the best lessons of life you’re ever going to have.”

Theo said that the reason many entrepreneurs are dyslexia is two-fold “one, they are good at problem solving, but secondly no one else would give them a job.”

Theo inaugurated as Chancellor of Solent University

On Thursday 11th October, Theo headed to Southampton where he was inaugurated as Chancellor of Solent University. On a day steeped in tradition, Theo was warmly welcomed by the Vice Chancellor, Graham Baldwin and many of the University’s representatives.

On arrival at Solent, Theo was able to chat to some of the local media about his new role and discuss his ambitions for the University. He mentioned that his motto for life is “be the best you can be” and he believes that Solent gives its Students the opportunity to do just that with its fantastic facilities and brilliant teaching staff.

Two students who are studying for a Multimedia Journalism degree at the University came to interview Theo. It was an opportunity to learn a bit more about student life, after which Theo even said “I wish I was a student here!”

At 6pm guests started to arrive which included friends, family and local business leaders who were greeted to a reception at the state-of-the art The Spark building which Theo opened in 2017. At 6.45pm the ceremony began with a precession onto the stage alongside many of the University leaders.

The ceremony was opened by the University Orator, Professor Peter Lloyd, which was followed by an address from the Vice-Chancellor which covered the fantastic progress the University has made in the last 10 years. The pro-chancellor and Chairman of the Board of Governors, Phil Cotton, then delivered the encomium for Theo, the formal welcome and introduction of Theo and his achievements. This was followed by the official inauguration which saw Theo receive his black and gold Chancellor gown.

The President of Solent Students’ Union delivered an address which welcomed Theo on behalf of the students and furthered the points raised by the Vice-Chancellor on how Solent has risen in all the newspaper league tables and achieved TEF Silver, in recognition of the University’s excellent teaching.

Newly inaugurated Chancellor, Theo, addressed the congregation announcing to the audience that he also felt like a fresher! He thanked the University for the brilliant work that they have done, recently  jumping 15 places in The Sunday Times University Guide.

Theo highlighted that at the heart of the University is ambition; the students, professors and the investment all being a reflection of that. He went on to talk about how Solent is not an Ivory Tower, but that is why Solent offers so much to its students with its real life ethos.

Theo also reflected on his own school experience, and noted the importance of the teaching staff and how it just takes one brilliant teacher to inspire a student.

As Chancellor, Theo will be the ceremonial head of the University and one of its most important ambassadors, representing the University externally, both nationally and internationally, working closely with the Vice-Chancellor and the Pro-Chancellor.

Commenting on the day Vice-Chancellor, professor Graham Baldwin, said: Vice-Chancellor, Professor Graham Baldwin, says: “Theo joins us at an exciting and challenging time for higher education. No stranger to Solent or the broader sector, with two of his daughters graduating from the University, I am confident Theo’s appointment will help to strengthen our position as a local and global institution.

“Solent plays a key role in supporting local and regional economies, sharing knowledge, skills and resources with the local community. With his knowledge and experience from industry, Theo will also help us to strengthen partnerships and further enhance our commitment to real world learning.”

Theo heads to Wimbledon BookFest to talk all things retail

On Wednesday 10th October Theo headed to Wimbledon BookFest on Wimbledon Common for an interview with James Ashton to talk about the current retail environment and the future of the high street.

In a location very well known to Theo, who regularly walks his dog Gladys on the Common, a beautifully lit stage greeted a packed audience full of local businesses and members of Merton Chamber. As the TPRG head office is just down the hill, some colleagues came along to hear Theo’s view on the latest news in retail.

James Ashton, a journalist who has been City Editor and Executive Editor of the London Evening Standard and before that City Editor of the Sunday Times, questioned Theo on the current retail climate, business rates and even took him on a trip down memory lane to where his passion for retail started, as a school boy running a tuck shop!

Brexit and politicians were also a key topic of the evening, with Theo commenting on the current confusion around Brexit and how politicians seem to be more interested in their careers than getting the job done!

After the interview, it was opened up to the floor where Theo was asked about the importance of the local community for business and how to attract the right candidates for jobs.

Wimbledon BookFest is a charity promoting arts, culture and education. Its aim is to develop the cultural offering for the local community through provision of an annual arts festival and educational projects with schools and young people.