In the year Matalan turns 30, founder John Hargreaves has this week received the Drapers Lifetime Achievement Award. In his first ever interview, the self-confessed workaholic, who built up his fashion empire from scratch, explains how he’s always been a value man.
The man behind Matalan
“I don’t know anything about business; I’ve just learnt as I’ve gone along. But I’ve always had good people around me and I think that is critical,” says Matalan’s publicity-shy founder John Hargreaves.
Born in 1944 as the middle child of eight, who all shared one bedroom in a terraced house in inner-city Liverpool, Hargreaves “never dreamt for one second” that he’d be where he is today. His Matalan business has developed into a portfolio of more than 220 UK stores and 21 overseas franchise stores, employing more than 16,000 staff.
This year’s Sunday Times Rich List estimates he is worth around £1bn and places him at number 108, but the Monaco resident readily admits: “I’ve always been a value guy.”
“I used to go up and down [Liverpool’s Great Homer Street] market and compare what people were selling; I’d always undercut them because I’d rather sell a lot at a little than a few with a big margin,” he explains in a soft Scouse accent while sat in a grand showroom at 31 Old Burlington Street in Mayfair, home to men’s heritage brand Wolsey, which is run by his son Jamey.
However, while one former executive describes him as “a great retailer with great retail instinct” and refers to his yacht and plane, he adds “He is not a flash man. He’s very down to earth”, which is how he appears.
Having left school at the age of 14 with hopes of joining the Merchant Navy, jealous of friends returning from the distant shores of New York with exotic boxer shorts, belts and records, he stumbled into the fashion industry by chance. Needing to find a job, he gained his first position at a clothing wholesaler called Stoops & Co in Islington, Liverpool, as “the boy” unpacking parcels on the day he turned 15.
“I loved clothes, but I knew nothing about them,” he remembers. “I was very much into fashion at that stage. We were Mods, Teds, everything.”
He showed promise with a knack for recalling the product prices as he unpacked, as well as where he’d put them and where they came from. At 16, he was sent out selling to shops, giving him a taste for life as a trader.
He married young, at 19, and was making good money from commission. However, aspiring to more, he saved £45 to buy a reel of fabric that he made into A-line dresses, which he sold at Great Homer Street Market. Netting £13 in one Saturday afternoon, more than his week’s salary of £11, spurred him on to save a further £50 to buy an old van. He gave up his job for the markets in 1964, aged 20.
“I always loved trading since being a kid; I loved buying something and selling it, whatever it was,” he says, explaining that he became a regular on markets around Liverpool before expanding as far as Pwllheli in northwest Wales, employing his younger brother Frank and older brother Billy.
I always loved trading since being a kid; I loved buying something and selling it, whatever it was
After too many cold early morning starts, Hargreaves decided there was an easier way to make money. He opened his first Jaymax store in 1976, named after his sons Jason and Jamey and daughter Maxine, and selling seconds from high street chains like Marks & Spencer.
As others cottoned on to buying high street seconds, and to ensure a constant supply of stock, Hargreaves decided to start sourcing new product directly from the Far East a couple of years later for his growing network of stores, as well as supplying other market traders and small shops.
“I thought: ’If the importers can do it, I can do it’,” he says, recalling buying trips to Hong Kong where he visited huge buildings in Kowloon that sold chickens on one floor and knitwear on another.
“I’ve heard all kinds of stories about people getting containers of sawdust, but we never had anything like that. We must have been very lucky,” he acknowledges.
By the mid-1980s, he had grown the Jaymax chain to a portfolio of 35 stores with a turnover of £10m, alongside a significant wholesale business supplying market traders and small stores.
However, it was while visiting friends in Los Angeles that he got the idea that would transform his life for good. Visiting Price Club with his hairdresser friend to buy goods for his salon, Hargreaves immediately spotted the potential for the members-only discount warehouse format in the UK, a precursor to big-name discount clubs such as Costco and Sam’s Club.
On his return, he created a separate space in his Preston warehouse to offer product at 20% more than his wholesale prices but 25% cheaper than his store prices through a members-club format to avoid the need for retail planning permission. He bought a ready-made shelf company and in May 1985 Matalan Discount Club (Cash and Carry) was born.
“There’s no meaning to the name Matalan whatsoever,” he says, quipping that if he had a pound for everyone who’d asked him what it stood for, he’d be a very rich man indeed. “I’ve been told that it’s my two sons Matt and Alan, but it’s definitely not.”
The Preston warehouse was located just off the M6 motorway near Bamber Bridge to service the Jaymax stores, which Hargreaves began closing down to transition into Matalan. Due to its out-of-town location, though, it got no passing trade.
“I had a bright idea that I’d approach the HR manager at [nearby automotive manufacturer] British Leyland to ask if I could bring some stuff into the canteen at lunchtime and show them the prices. If they liked it, they could become a member of Matalan discount club and buy product at discount prices,” he says.
He then approached another local company, British Telecom, to do the same. Within weeks, he says, “we had something like 8,000 to 10,000 members”, heralding the start of the pioneering Matalan database that today boasts almost 12 million members and covers almost 70% of UK households.
Matalan grew rapidly and by 1995 it had 55 stores. Hargreaves was then approached by retail conglomerate Kingfisher to buy the business. A deal was almost done but fell through at the final hurdle, which Hargreaves now views as a lucky escape as “we would have sold for £220m”.
He appointed former Dorothy Perkins, Debenhams and Kingfisher executive Angus Monro as chief executive in 1996 and became chairman of the board. In 1997 the company moved its headquarters to Skelmersdale, Lancashire, and a year later he set his sights on a stock market flotation.
“I was a very ambitious kid. I always felt that if you’re having one, you may as well have two – and if you’re having two, why don’t you have four?” he recalls. “Numbers didn’t mean nothing to me. I was always looking for how to evolve it to the next stage.”
At this point, Hargreaves was working seven days a week, visiting stores or looking for new locations at weekends and making four annual three-week sourcing trips to “wherever the prices were right”, taking in Bangladesh, India, Sri Lanka, Cambodia, Hong Kong and China.
I’m probably a workaholic really, and it does take you a bit of time to ease off
His first “pinch-me” moment was listing 23.5 million shares on the London Stock Exchange in May 1998.
However, he was quickly back to the day job. By 2000 he decided to re-evaluate his life, selling a portion of his 69% stake in the business and moving to Monaco, where he still lives.
“I was a very wealthy man on paper, but I actually didn’t have any great wealth because I was pumping everything back in [to Matalan], so I decided to sell some shares and move,” he says.
“I’m probably a workaholic really, and it does take you a bit of time to ease off. When I first went to Monaco, I didn’t know what to do with myself and I was driving people mad. I was never off the phone.”
He pulled back from the business and became chairman, cutting his role down to a couple of days a week. However, over the next four or five years he started to feel he didn’t like the way the business was going so made an approach to buy it back.
“I felt they were losing the advantage of what we were: the leader in the value sector. They were all about margins and pushing prices up, so in 2005 I approached the board of directors and said I’d be interested in buying the business back because the share price was dropping.”
He successfully took the company private again a year later, in an £827m deal backed by £410m of debt, installed a management team and backed off again.
All three of his children were schooled in the business, but only Jason remained at this stage, having worked at Matalan in various roles since he was 16.
Today, Jason is the only child to have remained in the value sector, like his father, as managing director of Matalan. His other son, Jamey, runs Wolsey, Morley and denim label Blk Dnm and ownes 50% of Julien Macdonald, while his daughter, Maxine, runs and owns Nicole Farhi and Fenn Wright Manson, and has an investment in mid-market womenswear brand Damsel in a Dress.
Hargreaves admits that he is a hard taskmaster, particularly with his children: “You say things to your children that you couldn’t say to your employees because you expect a lot more of them; I think a lot of fathers are like that.”
Retail analyst Nick Bubb met Hargreaves on occasion when the company was public during analyst briefings, describing him as “appearing quite shy but a straightforward bloke”, who was keen to promote his kids.
Jason was appointed to the role of managing director at Matalan in 2013, after chief executive Darren Blackhurst stepped down.
Hargreaves describes Matalan’s recent venture onto the high street, which culminated in the opening of a store on London’s Oxford Street in June, as a “work in progress, with a lot to do on the model”, but says he’s happy with progress so far. The retailer is also building its own web platform and by next year he says it will be an “all-singing, all-dancing platform, which will be the best in kind”.
“On an international level, it will allow us to test countries like France, Spain, Germany and Italy to see where the most promising response comes from, and then from that we’ll assess if it is worth a bricks-and-mortar there,” he says.
In July, Matalan also launched an online company called Matalan Direct, offering big-ticket items such as bedroom, bathroom and living room furniture and appliances. Next year, there are plans to launch around five bricks-and-mortar stores offering the new fuller range, all decked out with Matalan products.
Matalan’s sales fell by 2.5% to £1.1bn in the year ending February 28, while EBITDA rose 5.1% to £100.3m as the business encountered problems caused by moving to a new distribution centre, which has since improved.
Hargreaves has stepped back from the business almost entirely, but he is always happy to give an opinion when it is asked for.
“It would be fair to say I do have my opinions,” he laughs. “I’m very much into value – that’s what our customers want. Delivering value and customer satisfaction is high on my agenda. I keep saying that if you get the right product for your customer, they will buy it.”
The drive that always pushed him to go one step further doesn’t seem to have waned much in his later years. Now he spends his mornings keeping fit and playing golf (badly, he says), but in the afternoons he’s back at his desk in his office in Monaco.
He describes himself as a “big investor across a number of sectors”, as well as being active in various charity projects, namely the NSPCC and Alder Hey children’s hospital in his hometown of Liverpool.
The family is notoriously low profile – he won’t be pushed to talk about his wife, who he says has always been in the background – but he does disclose that, as a family and as Matalan, they are the single biggest donor to the NSPCC in the country. Matalan’s Alphabet Scarves campaign for Christmas 2014 raised £650,000 for Alder Hey and the new Beanie Vs Bobble collection of hats for autumn 15 aims to raise even more.
Hargreaves is clearly a private man but charming if you get the chance to meet him. And he has no regrets. “I’ve always been one of those who thinks you can’t alter the past – I’m all about the future,” he says, before being led to his first press photoshoot in 71 years, which is naturally hasty at his request.