The owner of concessions firm Hallett Retail is pulling off the difficult trick of keeping both brands and host stores happy.
Being piggy in the middle between retailer and brand can be a difficult position to take on, and having to keep the two sides happy during a recession is no easy task.
Which may explain why Hallett Retail is one of a kind. Established in 1999 by Wendy Hallett, the concessions operator filled a gap no one had spotted – or considered a worthwhile business opportunity – before. With more than a decade’s experience in retail, Hallett was well placed to become an intermediary between brands wanting to get onto the high street and the retail ‘hosts’ who needed new and innovative product to fill the shelves.
Despite recessions typically hurting the middle-men-type businesses, Hallett Retail has thrived, particularly in the past five years. Its most recent results for the year to December 31, 2011, record a turnover of £19.7m – up £3m on the preceding year. Although profits were down, this was largely as a result of “considerable investment” as well as the increased cost of sales or other expenses. Growth has been driven by savvy decisions and by broadening the Hallett Retail net.
Hallett sees one of the biggest game changers as the decision to bring her husband Kevin in as chief operating officer in 2007. His background in management accountancy and IT has helped push the business into the 21st century.
“He has opposite skills to me, and gave me the confidence to expand,” she says. “Since he came on board we’ve grown to become a serious industry player.”
Since then Hallett Retail has expanded from placing brands in five or six hosts to more than 30; while the number of brands represented has climbed from 15 to 20 to more than 100 – the current line-up includes Closet, Izabel, Yumi, Rage and True Decadence.
Hallett’s expanded team now “mimics a retailer” in much of its structure – it is divided into buyers, merchandisers and specialists in etail as well as other key elements such as HR. Hallett admits she is now more removed from the process, but maintains what she believes is the business’s most crucial part: relationships.
It’s clear the balance is delicate – margins are dropping and retailers are becoming more brutal with stock that doesn’t shift immediately. However, even they need to keep brands loyal, and Hallett treads a constant tightrope between the two sides.
Not everyone agrees that expansion is best for the brands, and directors spoken to by Drapers raised concerns that smaller voices get ignored, or that too many similar brands have to compete in the same concession.
Brands have also complained that the cut taken by Hallett Retail leaves too little left over for them. One says: “It works if you just want exposure, to advertise, but you’ll never make money.”
Another adds: “Wendy is great, and it’s a great business model, but a lot of people are pulling out because they’re not making any money.”
However, Hallett says there has been no change to the line-up of key brands for some time, and puts any departures of the smaller names down to the natural cycle of the business.
But she is conscious of the changes that expansion has brought to the business, and understands concerns around competing in the same space, but insists that flexibility is key to the success of everyone in the food chain.
“You need some brands that are similar – if one catches a cold or misses a trend you have to be able to fill that space,” she says.
“If the host were overexposed to a single brand and something happened, we would all be in trouble.”
She believes that margins are tight for everyone as a result of the recession, and is constantly looking for new ways to give both hosts and brands added value for their money.
It’s too early days for her to offer much meat on the bone, but she does outline what is on the horizon. For host retailers, new product areas are key, and talks are taking place for Hallett Retail to begin introducing lingerie and plus-size clothing to its concessions. She says further development of the menswear offering is also “an obvious opportunity for us”.
For brands, infrastructure and logistics is something Hallett Retail – with its economies of scale – can help with, a cheaper alternative to going it alone, especially when targeting foreign markets. Hallett Retail is now present in Germany and Sweden and conversations are taking place with other international retailers about entering further markets.
“We are a unique concept, not only in the UK but also in Europe, which is our first port of call,” says Hallett. “We’re investigating opportunities but just as with here, you have to balance finding the right host with the right brand.”
Etail is another area of anticipated growth and Hallett Retail is now at the final stages of developing a transactional website for its consumer-facing fascia Fuse Fashion Network.
The network has been rolled out into department stores such as Debenhams, Beales, House of Fraser and Outfit in the past couple of years, as well as a number of indie department stores including Browns of York and De Gruchy in St Helier, Jersey. The business also sells some of its brands in New Look and Dorothy Perkins.
One of the aims of the website will be to increase the number of brands available through the Fuse Fashion Network.
“As a business, we need brands that are new and innovative, but sometimes that means they don’t have the funds to expand fully,” she explains. “This allows us to bring brands to the market and test them. Then, if that works, we can look at introducing them to the high street.”
Some won’t work out and will be dropped, others will remain on the website alone or possibly move into a small selection of stores, while in some instances the success of a brand will take it into 350 branches across the country. Hallett says the key point is her ability to “flex”.
“When we started, we had a proportion of brands that failed, but we have significantly reduced that proportion,” she says. “It’s partly experience and knowledge in selecting the brands we take on at first, but also about having more resource to support them.
“We work now very closely with brands to find ways to ensure they can make a profit.”
Although Hallett accepts a degree of failure, her team has also become more selective about which brands they take on. The first criterion is product list – Hallett acknowledges that as fashion trends move on, some brands become more attractive and others less so – but the culture of the business is also important. The overall “vision” and “desire for expansion” is also crucial – although this of course has to be tempered with a healthy dose of realism.
Even if the brand is likely to remain relatively small she will take a chance if the product is right, but ultimately the bottom line is a key driver.
However, Hallett tries to avoid being too prescriptive. “As an entrepreneur it’s important to recognise that if you start setting criteria for what you will or won’t take on, you could miss the next big thing.”