Oliver Bonas founder Olly Tress explains why he was the first fashion boss to commit to paying all staff the living wage, and his plans for the future
Faced with a gang of angry, rioting teenagers, most people would wind up their car window and drive on. But Oliver Bonas founder and chief executive Olly Tress did not do that – he took umbrage with what he was witnessing, got out of the car and challenged them. The result was a bloodied face, a photo of which can still be found floating around Google.
Tress went out during the London riots in 2011 to check on his Oliver Bonas shop on Northcote Road in Clapham Junction, one of the areas worst hit by looting. The store is one of 52 across London and the southeast, in high street and transport locations, all of which stock a mix of fashion, accessories, jewellery and lifestyle products, such as books, wall art and small items of furniture. Luckily, the looters passed it by.
That Tress took the risk of checking on it amid the violence in the streets is testament to his passion for the business, while his decision to get out of the car and berate some of the perpetrators points to an impulsive streak.
The full monty was paying the living wage across the board. That worked out at around three-quarters of a million pounds
This tendency to act on his instincts is partly responsible for the decision last year to become the first UK retailer to commit to pay all of its directly employed staff – of which there are more than 600 – and third-party contractors over the age of 18 at least the voluntary living wage of £7.85/hour and £9.15/hour in London. This is above the government’s compulsory national living wage of £7.20/hour for over-25s, which comes into effect on April 1.
“We didn’t focus on the living wage to start with – we just said we want to pay people on our entry-level salaries more, because we think we should,” explains Tress. “We felt there would be benefits we couldn’t quantify.” His HR team costed a few possible scenarios, including paying just some staff upwards of the living wage, or increasing salaries across the board by a smaller percentage.
“The full monty was paying the living wage across the board,” says Tress. “That worked out at around three-quarters of a million pounds. It was a lot of money but at the same time we were reaching happier economies of scale. Profits and sales were aligned where they hadn’t been in the past.”
Oliver Bonas had been growing solidly for the best part of two years by this time.
“If we hadn’t had a sense of confidence that some of that growth would continue, we might not have done it,” he says. ”It was definitely a leap of faith. But if you don’t dive in, it would never be the right time because it is such a daunting and immovable financial commitment – you can’t retract it.”
Oliver Bonas warehouse staff
It is a big commitment, which is why Oliver Bonas is still ahead of the pack. PwC has predicted that the new compulsory living wage for over-25s will add on average £1.6m to retailers’ wage bills this year, and another £11m by 2020.
“The living wage comes at a pivotal moment for the industry,” says independent analyst Richard Hyman. “In theory, retail should pay its people more. The industry is the largest employer outside the public sector, and has a responsibility to the wider economy.
“Trouble is, retailers have never had so much pressure on cash flow, hence the wall-to-wall promotions we are seeing. Only some companies can afford higher wages.”
But Katherine Chapman, director of the Living Wage Foundation, says Oliver Bonas’s decision to pay a higher living wage to all its staff shows that “while it’s not always an easy choice for business to make, it is the right choice and has clear benefits for employers in increasing productivity and better quality of life for employees”.
Of his reasons for implementing the living wage, Tress says simply: “If you live in a country that’s prosperous and advanced, and people aren’t paid a living wage, you have to ask if there’s something wrong with the system.”
Oliver Bonas was, he admits, in a stronger position than some to be able to pay a higher wage. Tress launched the business in 1993 and, as its most recent Companies House filings show, pre-tax profits surged by 86% to £2.19m for the year to November 30 2014. Sales grew 30% to £30.3m and are set to grow at a similar rate again this year. The company has benefited from greater economies of scale as it has grown, while moving more of its designs in house has helped to boost sales and margins. Tress does not give an indication of the extent to which the living wage will hit profits, but he is confident of ending this year in the black.
The retailer has 52 stores, in a mix of high streets and transport locations, and plans to open another 10 this year. A new press showroom opened above the store on Eastcastle Street, behind Oxford Street in London, in March, adding to its head office and warehouse distribution centre in Chessington, Surrey.
Tress has come a long way since he began buying handbags, scarves and the odd item of clothing in Hong Kong – where his parents were living at the time – and selling them to his friends at Durham University, where he was reading anthropology in the mid to late-1980s. From there he went on to sell at markets, before opening his first Oliver Bonas shop on the Fulham Road in London in 1993 (Bonas was the surname of his then girlfriend). It opened mid-week and by the first Saturday it had taken about £1,000.
“I was euphoric,” recalls Tress. “I thought, ‘my god, this could work.’” More stores followed, and then the website in 1999.
We come from a bricks-and-mortar background, but the website is now over the 10% mark and we have huge aspirations for it
Online now accounts for 10% of sales and, he says, this is creeping up: “We come from a bricks-and-mortar background, but the website is now over the 10% mark and we have huge aspirations for it. We’ve replatformed and spent a lot on photography.”
But there is still a long way to go on the multichannel journey: “We don’t know exactly what our customers do, how much is online, so that’s difficult.” There are plans to launch international websites this year, details of which are still being worked out. In the UK, Oliver Bonas will launch a catalogue in May, followed by another in time for Christmas.
Also this year, Tress is attempting to reposition Oliver Bonas from being perceived as affordable to aspirational, without making any dramatic changes to the product or price points: “That’s a bit of a strategic shift for us, to say we don’t want to be known for our accessibility. It reflects the long journey from our legacy as a gift-oriented retailer selling other people’s products to designing our own.” Around 75% of the stock is now designed in house and Tress would like to increase this, although some products, such as books, have be sourced from elsewhere.
Fashion sales represented 20.8% of the total last year, and this category is ”having a moment” at Oliver Bonas, says Tress: “It’s really down to product. We were still finding our feet last year. We weren’t happy and it was reflected in sales. It’s only in the last three years we’ve had a proper team and it has taken time to settle in. Now we’ve found our handwriting, we have a team that works intuitively together. Full-price sales are very good.”
Tress may be impulsive at times, but he also has a slow, steady approach to growing the business, and he is willing to take the hit to his bottom line that comes from paying a higher living wage. It is part of what makes Oliver Bonas a strong business and, if its owner can steer clear of riots, he could realise his ambition of having shops on every high street and in every station in the UK.