It’s been just 15 months since the owner of Select rescued the young fashion chain from administration, but through clever repositioning it is already turning a profit
Cafer Mahiroglu is a retailer. He may also own a leading high street supply business, but he is a bona fide retailer who is adamant that he does not want to be presented as just another supplier tempted by margin gains and trying his luck with a few shops.
The Select owner was already well known to those on the inside of the high street, but when he injected £13 million into the struggling young fashion chain in January 2008, Mahiroglu was catapulted into a much bigger league. Just two months later the business collapsed under the weight of increased competition and the start of the economic downturn. The fall ultimately led to the departure of Select founding director Nigel Fisher after 25 years. Mahiroglu bought half of the stores for about £2.5m and set about overhauling the business, bringing in a new management team and addressing product ranges to make them more fashionable.
Mahiroglu, whose first name is pronounced ‘Jaffa’, says: “I was a supplier to the business but I wasn’t a big supplier. It was more that it was a big opportunity at the right time. We felt we could make a big improvement to the business.”
The shedding of some 125 stores via the administration gave Mahiroglu a more viable business to build upon. He retained the well respected Debra Bloom as buying director and drafted in David Pidgeon, formerly of value chains Bonmarché and QS, as chief executive, to ensure the business had an experienced retailer at the helm.
“We cut our central overheads and ditched the loss-making stores,” says Mahiroglu, who insiders say is obsessive on cost control. “The business needs to be about product and people. You can have the best-located stores, but if you don’t have the right team and management it won’t work.”
The new team set about repositioning Select, recognising that it was no longer an option to just trade on price since the emergence of value giant Primark. “Style-wise we’ve moved towards River Island and Topshop in that we’ve created a unique handwriting, but price-wise we are attacking New Look and Peacocks,” says Mahiroglu.
Quick off the mark
“Our stores are smaller than New Look and Peacocks and this means we can react quicker and be more creative. We are fresh and don’t have much in the way of heritage and this market really needs something different.”
Topshop styling at Peacocks prices is a tall order and although Mahiroglu prefers not to dwell on his supply background, it is clear that his factories in Turkey are making this a viable strategy. “Our model is based on turning the stock fast. We turn the range around every six weeks. We are not repeating many lines. We do a version of a style and then move on. We’re getting between 60 to 80 new options in a week.”
He adds: “Our sourcing is split about 70/30 between us and third-party suppliers. It is important to have third-party suppliers so we continue to have new ideas, but our customers do get the benefit of our own manufacturing.”
Select has also hired about a dozen designers to ensure its ranges have a point of difference to the larger-scale value players. “We’re also actively recruiting from mainstream high street players like Peacocks and [etailer] Asos. We are looking to recruit in a number of areas and are always on the lookout for retail buying talent. But we want people with the skills to take the business to where it is going in the next few years, not just for where it is today.”
Mahiroglu says the business is trading up 20% on a like-for-like basis and that margin has stayed the same thanks to improvements in the ranges. He points out that Select traded at full price over Easter while his competitors were discounting. But he admits there is still work to do on some categories. “We don’t have jewellery yet, for instance. We’re strong in cotton and jersey areas and dresses. But this season we under bought skirts. We are addressing the mix.”
Mahiroglu plans to take advantage of the weak property market by opening up to 30 stores this year, taking the business to 160 stores. Earlier this month he dismissed an acquisition of Bay Trading, which went into administration [and was subsequently rescued by supplier Rinku Group], because the average shop size was well below his target of 3,000sq ft to 3,500sq ft.
Mahiroglu says he wants to get the business to 200 stores and for Select to operate 300 shops. But his steely grip on costs remains at the forefront of his mind and Mahiroglu seems determined that the chain won’t face any repeat of the difficulties it ran into last year. He says: “After 200 stores, probably in 2012, we will need to carefully control costs. If you don’t have the right range, the right team or the correct cost base, what is the point? Rent is not your only liability, there are till costs, lighting costs and so on. Every firm needs to know all its costs, down to how much the dustman is paid.”
It is almost certainly Mahiroglu’s supply background working with high street retailers on what can often be wafer-thin margins that has honed his skills on cost management. And, in the current climate, not many thorough-bred retailers would argue against cost management being the key to survival.
Mahiroglu sounds just like one when he rounds off his interview with Drapers: “Your range and your management can be good, but if you don’t watch the costs all that is wasted. It is easy to make money. The hard thing is to save money, and if you can’t control money, what’s the point of making it?”
- 2008 Rescues Select from administration. Appoints David Pidgeon as chief executive and begins repositioning of the chain
- 1991 Sets up own-label fashion supply business to the high street
- 1990 Arrives in the UK
Who in fashion do you most admire?
My answer is more mainstream retail oriented than fashion oriented. I have a particular regard for John Hargreaves [founder of Matalan] and the Hargreaves family. In a relatively small number of years they created a unique out-of-town clothing retail concept in the UK that remains resilient even with the threat of the supermarkets.
What has been the proudest moment of your career to date?
It has to be acquiring Select and the subsequent, ongoing reorganisation and repositioning of the business.
What is the best-selling product you have ever worked on?
At one end of the scale, in terms of sheer volume there are a number of core jersey lines in my time that have sold hundreds of thousands of pieces. However, what is more exciting for me now is when new, short-order, fashion-forward lines come into the business and instantly sell out within one week. It reaffirms our strategy to always push for newness and fashionability in our business.
How did you get into fashion?
It’s far too long and complicated a story to tell. I’ve always been into selling though. When I was seven I was selling pencils to the other kids at school.
What would be your dream job (apart from your current position)?
I’ve only ever wanted to work for myself. I grew up in a family environment where we always had that view of life. So what I do now is what I know and what I love.