After 14 years working for Mohamed Al Fayed at Harrods, Nigel Blow was headhunted by Irish department store business Brown Thomas to lead it through its next stage of development.
This is the guy you should be interviewing,” says Brown Thomas chief executive Nigel Blow, pointing to the store’s smartly clad doorman. “He told me Bertie Ahern (the Irish prime minister) was going to resign two days before it was announced – he’s the best connected man in this city.”
Good intelligence in a small and fiercely competitive retail environment such as in the Republic of Ireland is all-important, as Blow knows only too well. For the past 14 months he has been heading up Brown Thomas, which apart from its flagship department store in central Dublin has branches in Cork, Limerick and Galway.
Not that this 41-year-old executive isn’t used to the cut and thrust of serious competition. Before taking the job at Brown Thomas he spent a total of 14 years working for Mohamed Al Fayed, most recently as buying and merchandise director at Harrods.
So what made him swap Knightsbridge for Grafton Street in Dublin? “I wasn’t actively looking for a job. I was headhunted – the phone rang and from that first conversation there was just something incredibly attractive about this role,” he explains.
“In terms of Harrods, I suppose I was aware that I was getting to the stage of being a lifer. I had always wanted to run a department store business, but whatever job you do at Harrods, there is only one person who really runs the business and that is Mohamed. He is passionately involved in it 24 hours a day and is very hands-on.
“Harrods is a high-pressure environment, but in a strange sort of way Mohamed shelters you from some of that pressure because ultimately he is the one who makes the decisions. I consider myself lucky now to have been able to work with two intensely passionate owners. Galen Weston [the owner of Brown Thomas] has a very different style –he is much more ‘hands off’. I see him about six times a year, whereas I saw Mohamed six times a week. They are very different guys, but there are underlying similarities in the huge passion both of them have for their business in terms of how they want them to perform and be presented.”
Brown Thomas might be a significantly smaller fish than Harrods in size and turnover – it trades over 120,000sq ft and in the year to February 4 2007 its total sales were 250 million (£199m) with a profit of 24.1m (£19.2m) – but it has the added complexity of other stores, with two of about 50,000sq ft in Cork and Limerick and one of 30,000sq ft in Galway. There are also three BT2 stores that house young fashion brands.
Blow says: “The multi-store aspect was incredibly appealing to me when I was offered the job. It presented a different kind of challenge. When I arrived there were already plans in place to refurbish the regional stores. Now both Cork and Galway have new-look ground floors, and a large part of the work we’ve been doing over the past year has been focused on that. Dublin accounts for more than half of overall sales but the contribution made by the regions is still significant.”
2008 kicked off with more refurbishment, this time in Dublin, where the menswear offer – most of which had been sitting on the ground floor – has been moved into a 30,000sq ft basement space. The first phase of the new-look department, which includes a beautiful staircase, opened last week. The second phase will be completed in September. The menswear area used to be split over two floors at Brown Thomas, with shirts and ties separated from the rest of formalwear.
Blow says: “It’s a no-brainer really, putting formalwear together, and I’m hoping for a significant lift in shirt and tie sales as a result. We wanted to create a space that guys could call their own, an intimate shopping area. The ground floor, which has a pace and a buzz all of its own, wasn’t really the place for that.
“There is much more competition in menswear in Ireland than in womenswear, with some really first-class businesses in Dublin itself and in the regions, so we needed to raise our game.”
The menswear area hosts brands such as Brioni, Canali, Ermenegildo Zegna, Armani Collezioni, Paul Smith and Hugo Boss as well as Ralph Lauren. Blow says: “We weren’t doing them or ourselves justice before.”
The space vacated by menswear on the ground floor will be used to house fine jewellery and luxury lifestyle brands such as Jo Malone, and should be open in time for Christmas. “It’s not a Wonder Room or a fine jewellery room in the vein of Selfridges or Harrods,” says Blow. “We simply don’t have the space. It is a way of housing brands such as Cartier and Tiffany, and giving the 8,000sq ft space real impact. We had two choices: we could bring in lots of jewellery brands in a small way, or we could do what we have opted for, which is to represent fewer brands but create more impact. There wasn’t a Tiffany store in Ireland before, or a Cartier business of this size and that’s the exciting thing for us. We also have Theo Fennell, and are in talks with two or three other brands for the area.”
In-store investment doesn’t stop there, with a new women’s personal shopping area opening towards the end of this year. “At the moment we have two personal shopping areas as part of the womenswear floor. Our plan is to create a more standalone department with four suites. The Irish love personal shopping, and we are intent on building on what is already a very significant business. It is a real opportunity for us,” says Blow.
All in all, 15 million (£12m) will have been spent on store projects this year. Every square foot counts at Brown Thomas, and Blow admits that deciding how to use it can lead to some hot debate within the business. He says: “Brown Thomas has the highest sales per square foot that I have ever seen at any department store. We are always short of space and it makes the decisions about changes incredibly important.
“Department stores need to be fun too, and sometimes it can be hard to find the space to have some fun at Brown Thomas. People look to the store for the new and the innovative – we can’t afford to be boring. It leads to some lively debates between buying directors.”
Given the space limitations at Brown Thomas, it could be assumed that growing the business in terms of sales and profits is hampered by its size. Blow challenges this assumption and says there are plenty of ways to drive the top and bottom lines. But he concedes that the city is set to change radically, with the shopping area around Henry Street on the north side of the city due to undergo massive redevelopment (Brown Thomas is on the south side).
Joe O’Reilly, owner of property developer Chartered Land, has spent about €180m (£143m) on a 5.5-acre site for the proposed Dublin Central shopping, leisure and residential scheme between Upper O’Connell Street and Moore Street. The €1.25 billion (£993m) scheme – which includes two new pedestrianised streets and three public squares, will add 700,000sq ft of retail space to the city centre. Another 400,000sq ft is planned by department store Arnotts for nearby Princes Street.
Grafton Street, where Brown Thomas is located, is often referred to as a Knightsbridge while Henry Street is more like Oxford Street in terms of retail offer and customer. But Blow says the business is aware that it should consider all the opportunities opening up via the redevelopment taking place on the north side of the city.
He says: “We need to keep a keen eye on what is going on in the north side. We cannot discount the fact that there might be an additional opportunity for us in the city centre by having some sort of presence over there. The building we are in now is iconic and we would never move from it, but there may be potential to have something else as well. There is an enormous appetite for brands here in Ireland – something that has gone largely untapped for a long time. I’m not saying that the north side shopper never comes to Brown Thomas, that would be naive. But the fact is they are a different shopper.”
Exclusivity has long been the USP for Brown Thomas, with the store managing to retain with an iron fist the distribution rights over certain brands for the whole of Ireland, let alone Dublin.
Blow admits that exclusivity is the lifeblood of the business and concedes that to hang on to that position when so much is set to change in Dublin could prove a challenge. “By 2015 Dublin will look like a very different place in terms of retail, and that is another reason why we may need to be a part of the schemes on the north side of the city,” he explains.
Blow adds that in hindsight it might have made sense for the business to have taken more space and presented more of a Brown Thomas offer in the Dundrum Town Centre shopping mall, where it has a BT2. He adds: “We are looking at phase two of Dundrum to see what opportunities might open up for us there.”
In the regions Blow also sees potential for the business to expand, particularly in Galway and Limerick. “If we could add to our space there in the future by picking up extra square footage, I think we would be interested. The Irish are fiercely loyal to their localities and the regional stores have a strong following,” he says.
There is a lot of talk among economists that Ireland’s rapid growth is now a thing of the past, and Blow says he is certainly aware that the business will not be immune from the effects of a downturn in the economy. But he is cautiously positive about the future, and says that sales for the financial year to February 4 2008 were 10% up on a good year.
“There is no doubt that the year ahead of us is going to be tougher, but I sense there is less doom and gloom about in Ireland than in the UK, although confidence is not as high as it was. Lending rates are less relevant here. What has made a difference though is house price deflation, which has knocked consumer confidence. How long this feeling lasts into next year is difficult to tell, but we’re hoping it’s not too far.”
The size of Brown Thomas’s Grafton Street flagship makes it difficult for the store to host large branded shop-in-shops and is, says Blow, part of the reason for the store’s unique atmosphere. “Our size makes us slightly less concession-led than most department store models. We describe ourselves as a department store with a boutique mentality and that is how we like to behave.”