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The Drapers Interview: Euan Sutherland on putting the 'super' in Superdry

Superdry had another stellar year in 2016, continuing its march across Europe. SuperGroup chief executive Euan Sutherland talks to Drapers about the secrets of its success.

Euan Sutherland

Euan Sutherland

Look around you on your daily commute and you will be sure to spot a Superdry logo on a hoodie, jacket or T-shirt. The brand has become ubiquitous since it first appeared on the British high street in 2003 and now has a physical presence in 51 countries. Last month, it opened its biggest store to date, in Berlin, and it has more international expansion planned for 2017.

This territorial growth led Superdry to report stellar Christmas sales last week – up 20.6% to £162.2m on 2015 for the 10 weeks to 7 January 2017.

Since it launched 14 years ago, Superdry has been intriguing consumers with its distinctive mix of Japanese characters and outdoorsy, Californian aesthetic. Despite appearances, the brand was born in the UK and is based in Cheltenham. It describes itself as “fusing iconic vintage Americana and high impact Japanese graphic imagery with a British twist”.

“We quite like that people talk about where the brand is from but they don’t really know,” explains Euan Sutherland, chief executive of Superdry’s parent company, SuperGroup. “It’s seen as very British in some markets, such as America and China, but in the UK it’s often thought of as Japanese.”

Cult following

Superdry was the brainchild of Julian Dunkerton, who at the time owned thriving multi-brand retailer Cult Clothing, and James Holder, the founder of Bench. The pair met when Cult began to stock Bench in the 1990s, and found they had a shared passion for product. They decided to launch a brand together following a trip to Tokyo.

There are risks in just being in one market. Brexit has highlighted that

Sutherland joined SuperGroup as CEO more than a decade later, in October 2014. He replaced Dunkerton, who moved aside to become group product and brand director. Holder resigned as a director and employee in May 2016, to lead the development of a new in-house product innovation consultancy called SuperDesign Lab and spend more time on his personal interests.

Sutherland says he and Dunkerton have a close working relationship: “Jules has that entrepreneurial flair that makes you stop and think and say, ‘yeah, there is a better way to do this.’

“Our offices in Cheltenham are about five yards apart and we talk on the phone every day. It’s a really powerful edge to have a founder still in the business.”

“It’s incredible working with Euan,” says Dunkerton. ”He has a formidable intellect, excellent attention to detail and can manage multiple channels effectively while simultaneously grasping the team’s needs emotionally, which allows me to focus more on product and brand. It’s turning into quite a partnership.”

Boots beginning

Sutherland started his career in 1992 as a product manager at Boots. He went on to hold a string of top jobs across varies companies, including CEO of Superdrug and group chief operating officer of B&Q owner Kingfisher. Most recently, he was chief executive of the Co-operative Group for just 10 months. He took up the role in early 2013, shortly before the group’s banking arm revealed a £1.5bn hole in its finances, and later quit, arguing that the business was “ungovernable”.

Under Sutherland’s leadership, Superdry’s sales have rocketed (see results, below).

The brand has expanded rapidly, opening 100 points of sale worldwide in 2016, and now has 512 owned, franchised or licensed stores and retail concessions.

Germany is Superdry’s biggest international market and the new 40,900 sq ft premises in west Berlin’s Kranzler Eck shopping centre is the jewel in its crown. It contains 24,000 sq ft of retail space, a wholesale showroom and a coffee shop.

“Everyone keeps asking me how many stores we’ve got and I can never give an accurate figure because we keep opening new ones,” chuckles Sutherland. “We’re opening around two a week [globally].”

Today, 55% of Superdry’s sales come from outside of the UK, up from around 20% three years ago.

Aw16 idris elba + superdry idris wears ie leather quilted flight bomber ú345 and call sheet colour jeans ú75

Autumn 16 Superdry with Idris Elba idris wears ie leather quilted flight bomber ú345 and call sheet colour jeans ú75

Idris Elba + Superdry autumn 16

 “There are risks in just being in one market,” explains Sutherland. ”Brexit has highlighted that.” He adds that the focus in 2017 will be to make a “bigger statement” in key international cities, such as Los Angeles.

Growth trajectory

The rapid pace of Superdry’s international expansion means Sutherland has a hectic schedule. When Drapers meets him in the new coffee shop in Berlin shortly before Christmas, he is approaching the end of a three-week stint on the continent, and had already squeezed in three trips to the US and two to China since the summer. Superdry is growing fast and Sutherland’s priority is to improve its efficiency.

“The business is quite inefficient because we came from small beginnings, so now we’re putting in systems, processes and infrastructure,” he says. “We’ve now got a much bigger distribution centre in the UK, which we’ve replicated in Europe and the US, and we use a process called ‘design to customer’, which maps everything we do from a creative idea coming into a designer’s head through to a customer buying it at the till, including sourcing.

“We used to source through agents but now we’re doing less and less of that, so we go direct. We’ve opened sourcing offices in Turkey and China.” This has allowed Superdry to develop closer relationships with its factories, as well as improving margins.

“There is clearly a margin benefit, because you’re not paying someone in the middle,” Sutherland explains. “That helps profitability but it can also be put back into price. We try to keep prices as keen as possible, because the brand for us stands for incredible attention to detail and great-quality garments at a price everyone can afford. We don’t want to be a super-premium brand.”

Although Superdry prices are a long way off “super-premium”, it does lean towards the higher end of the high street. Retail prices for menswear range from £16.99 for an embroidered T-shirt to £450 for a leather jacket from the brand’s collection with actor Idris Elba, which launched in autumn 15.

Superdry aw16 jackets campaign

Superdry aw16 jackets campaign

Womenswear prices are slightly lower, starting at £14.99 for a slouch T-shirt, and reaching £224.99 for a leather biker jacket. 

Wholesale is an important part of Superdry, making up 19% of its UK revenue and 62% in Europe. In the UK, it is stocked by retailers including Next, House of Fraser, Zalando and Shop Direct’s Very. Andrew Thomas, head of menswear buying at Shop Direct, says Superdry strikes the perfect balance between quality, style and affordability.

It’s about trying to appraise where the opportunities are for you, and maximising them

“Price perception is strong and quality helps the brand to attract loyal customers. The brand is underpinned by key pieces which have achieved huge popularity. You won’t go a day without seeing someone in a Superdry windcheater or hoodie.”

Paranoia play

Many British brands and retailers found 2016 challenging, as they faced into a perfect storm of the rising costs of doing business, teamed with a slowing economy, unseasonable weather, Brexit, heavy discounting and changing consumer behaviour.

Yet Sutherland makes Superdry’s success sound relatively simple, pointing to a winning combination of hard work and a “healthy dose of paranoia”: “It’s about trying to play the game we can play. What I mean by that is there are a lot of opportunities out there for every brand. It’s about trying to appraise where the opportunities are for you, and how to maximise them.”

He adds: “We have quite an old-fashioned approach to retail – there’s no debt in the business, we fund all our growth from cash and we’re absolutely obsessed with like-for-likes.”

Modern technology means I don’t have to wait until tomorrow morning to see the sales figures from today

Superdry’s success is also due in part to the impressive CVs of its executive team, who have, as Sutherland puts it, “all done bigger jobs in bigger companies”. CFO Nick Wharton is the former chief executive of home and furniture retailer Dunelm, global retail director Nick Tatum was at Tesco for more than 10 years and transformation director Paula Kerrigan is a fellow alumni of the Co-op Group, previously chief strategy officer.

“These guys have loads of experience, and capability,” Sutherland says. “If there’s a problem, which there is in every business, we face into it and turn it into action. People say ‘we had this problem at Tesco or Dunelm or Kingfisher and we tried something we think will work here’.”

Sutherland enjoys the immediacy of retail: “Modern technology means I don’t have to wait until tomorrow morning to see the sales figures from today. I get it every two hours by channel and we’re making decisions on it – less so for physical stores but definitely for online, which has become a huge part of our business. Just under 25% of the retail business comes from online and that’s grown from 14%-15% when I joined.”

Superdry China

Superdry China

Superdry China

When asked which other retailers he admires, he looks outside the fashion industry – to technology giant Apple: “The product is obviously a huge driver for those guys, but the store environment, the store training … when Apple stores open in the morning, the staff come on to the shop floor and it’s like they’re coming on to a stage. It’s an amazing concept and it’s so consistently delivered, from western China to Lincoln Road Miami.”

Despite the uncertainty surrounding Brexit, he believes the business is diverse enough to ride out the storm: “[Leaving the European Union] is still a concern, but it’s less of a concern than it would be if we were a 100% UK retailer. We’ve got lots of euro revenue coming in, which offsets some of the negative impact of the pound.

“This is the most uncertain political environment there’s been for a long time, with Trump becoming president in the US.

“All we’re trying to do is sell our T-shirts, jackets and hoodies,” he concludes. “Let’s try not to make it any more complicated than that.”

SuperGroup’s super results for the year to 30 April 2016, year on year

Group revenue up 21.3% to £590.1m

Like-for-like sales up 11.3%

Underlying pre-tax profit up 16.3% to £73.5m

And in the six months to 29 October 2016 year on year

Group revenue up 31.1% to £334m

Underlying pre-tax profit forecast of £20m-£22m

Total sales up 25% to £215.2m

Like-for-like sales up 12.8%

 

Julian dunkerton 211113[1] supergroup

Julian dunkerton 211113[1] supergroup

Superdry founder Julian Dunkerton on working with Sutherland

“It’s incredible working with Euan. He has a formidable intellect, excellent attention to detail and can manage multiple channels effectively while simultaneously grasping the teams needs emotionally, which allows me to focus more on product and brand. It’s turning into quite a partnership and it’s a pleasure to be making so much progress on so many fronts.”

More Superdry insights

 

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