The AlixPartners Outstanding Contribution to Retail Award
Theo Paphitis
Smart shopkeeping: How Theo Paphitis went from sales assistant to tycoon, TV star and campaigner
As Theo Paphitis wins the AlixPartners Outstanding Contribution to Retail Award, the boss of Ryman, Boux Avenue and Robert Dyas reflects on his lifelong passion for retail
On the short walk between his Wimbledon head office and a nearby Robert Dyas store, retail tycoon Theo Paphitis is stopped several times for selfies.
It is testament to his status as one of the most recognised business people in Britain, as famous for TV appearances on BBC series Dragons’ Den and Question Time as he is for building retail companies. Paphitis unfailingly smiles for the smartphone cameras, making jokes or offering words of encouragement to the fans who might hope to emulate his success.
Paphitis has come a long way since arriving in the UK from Cyprus as a child in 1966. He is dyslexic and was not academic at school – a report read “a splendid person with fine qualities, but unfortunately there are no examinations in this field” – and his first job was as a filing clerk in the City.
But from humble beginnings, Paphitis has built a formidable empire. While he has invested in everything from sports marketing businesses to Millwall Football Club along the way, it is as a retailer that he has made his fortune.
Paphitis’ passion for retail was born at Watches of Switzerland, which he joined as a store sales associate aged 18. From that small beginning, he has built up the Theo Paphitis Retail Group, with businesses spanning lingerie, stationery and hardware across 350 stores and online that generated sales last year of £340m.
That modest role at Watches of Switzerland allowed him to quickly understand the bigger picture of retail, and he liked what he saw.
He recalls: “I discovered retail. I discovered the fun of dealing with members of the public, of selling, of marketing, of profitability. Those were all things that were chiming with me, even as a sales assistant.”
Rebuilding retailers
On the day of his interview with Retail Week, Paphitis heads to Wimbledon’s Robert Dyas branch to mark the 10-year anniversary of his acquisition of the hardware specialist, which is also celebrating its 150th year in business. Like other struggling businesses Paphitis purchased, the company looked destined to disappear from the high street a decade ago, but it has been nurtured back to health under his ownership.
Paphitis’ approach of rebuilding businesses or realising their unfulfilled potential, rather than overseeing their funerals like some other investors in distressed retailers, has been enacted time and again at companies ranging from Partners in stationery to Contessa and La Senza in lingerie.
He says: “We buy a business on the basis that we’ll run it as if we’re going to own it forever. We’re not running it for a three-year smash and grab.”
“We buy a business on the basis that we’ll run it as if we’re going to own it forever. We’re not running it for a three-year smash and grab”
For Paphitis, his acquisitions represented value waiting to be unlocked and his achievements are recognised with this year’s AlixPartners Outstanding Contribution to Retail Award, also given in recognition of his profile on behalf of the industry.
He has, for instance, been a prominent voice in the campaign for business rates reform, as well as driving wider initiatives such as promoting entrepreneurial businesses through his Small Business Sunday programme – a social media initiative that has grown into a 3,500-strong network including events addressed by entrepreneurs such as AO founder John Roberts – and as an active backer of charities such as the Retail Trust.
It is smart “shopkeeping” – a modest, down-to-earth word that peppers Paphitis’ conversation – which has brought him success, made him a household name and enabled him to lend his support to good causes.
His shopkeeping strategy has always been informed by another characteristic: “common sense”, a phrase he uses just as frequently.
Despite his record of deal-making, Paphitis says: “We’ve always thought of ourselves as a small family business, which meant that we can be agile and reactive.
“We’re very conservative – you could argue that stopped us growing further – we’re sensible and we cut our suit according to our cloth. We don’t raid the larder every year, which allows us to survive in difficult times. Overall, the logic of Theo Paphitis Retail Group is common sense.”
This was exemplified by Ryman, which Paphitis bought out of receivership in 1995 and was the springboard to future deals.
Paphitis owned phone concessions in Ryman prior to the acquisition. At the time it was part of the ill-fated Pentos group, along with businesses including bookseller Dillons and art prints specialist Athena.
He recalls: “Ryman was part of an unhappy alliance. It wasn’t loved and you could see where there was neglect. Where there’s neglect, there are always obvious answers.
“For me, the dream was to buy Ryman and give it that love and direction. For a business that was struggling, you thought: ‘There are some really nice people here who actually are not bad’. If the people are good and they’re good at their job, why is the business struggling? Because it was part of a group whose priorities were elsewhere.
“It needed love and common sense, it needed to understand itself, it needed to live within its means – it’s all basic housekeeping. Then it was about bringing the people along with your vision.
“I wasn’t a messiah saying: ‘Follow me to the promised land’. I didn’t know where the promised land was, but I did know a lot of great people who had worked for the business for a long time. They knew their onions and were saying to me: ‘Some of the things we’re doing are stupid, we shouldn’t be doing them and no one’s listening to us’.”
“We’re sensible and we cut our suit according to our cloth. We don’t raid the larder every year, which allows us to survive in difficult times. Overall, the logic of Theo Paphitis Retail Group is common sense”
At Ryman, Paphitis, who had previously worked in fields including insurance and property, was able to build on the experience he gained as a youngster at Watches of Switzerland, along with that earned in less happy circumstances.
While previously running industrial group Astra, he bought Splash – a business that included souvenir shops.
Splash was afflicted by problems such as old, unsellable stock. Paphitis was shown the door but, while it was a tough period for him, he learned from the mistake as he ultimately bounced back.
He remembers: “The problem with that particular business was what we thought we’d bought wasn’t what we'd bought. It was the most painful time of my life but the lessons held me in good stead going forward.
“The hardest thing was choosing which businesses to buy and buying at the right price. Once you’ve done those two things, the rest of it is a tried-and-tested formula.”
Embracing challenge
As well as repeating that formula over the quarter-century since the Ryman deal, Paphitis has turned his hand to launching businesses, too. Lingerie specialist Boux Avenue made its debut in 2011. It now has 30 stores, trades online and has cut EBITDA losses after a difficult couple of years.
Paphitis found launching a business to be quite a different experience from those he was used to as, unlike his previous retail ventures, there was no historic footfall and sales data to inform decisions.
He says: “This was starting a brand from scratch. I certainly underestimated how difficult it would be.
“The cost of properties, the cost of maintaining properties… We thought we knew our onions but it was a bigger challenge to get the right properties at the right prices and establish a brand.
“When you’re a new brand, to be taking those properties in prime locations in shopping centres is a tough, tough gig.”
As tough gigs go, the pandemic was, for Paphitis as for many other retail leaders, perhaps the toughest. For the first time under his ownership, Ryman made a loss – as did the wider group – and his businesses faced a new landscape.
He says: “We’d all lived through crashes, recessions and all sorts of things. You knew you were going to come out the other side.
“My biggest concern is that, after the upheaval of Covid, I don’t think anyone could have expected the level of headwinds that we now have to endure.”
Boux Avenue made its debut in 2011
Boux Avenue made its debut in 2011
“The chancellor is in need of cash. Why would he not collect all that unclaimed tax that’s out there? We’d be in the frame as well but it would be fairer”
Timeline of a tycoon
- 1959: Born in Limassol, Cyprus. The family moved to the UK in 1966, first to Manchester and then to London
- 1976: Starts work as a £20-a-week filing clerk in a City insurance firm
- 1978: Gets his first job in retail as a sales assistant at Watches of Switzerland’s Old Bond Street branch
- 1980: Takes up a role at Legal & General selling commercial mortgages
- 1982: Launches his own property finance company
- 1987: Becomes chief executive of industrial group Astra, where problems with Splash lead to his exit
- 1992: Buys majority stake in NAG Telecom, which had stores in Ryman branches
- 1995: Buys Ryman out of receivership
- 1996: Purchases lingerie retailer Contessa
- 1997: Acquires La Senza’s UK lingerie business
- 2001: Buys stationery rival Partners from receivers
- 2005: Joins TV show Dragons’ Den as an investor
- 2006: Sells Contessa and La Senza to Lion Capital for a reported £100m
- 2007: Buys Stationery Box, which along with Partners is rebranded to Ryman
- 2011: Launches lingerie retailer Boux Avenue
- 2012: Buys Robert Dyas
- 2016: Buys art and design materials specialist London Graphic Centre
Paphitis bought Ryman in 1995
Paphitis bought Ryman in 1995
Boux Avenue was his first attempt to launch a retailer
Boux Avenue was his first attempt to launch a retailer
Robert Dyas was acquired by the group in 2012
Robert Dyas was acquired by the group in 2012
London Graphic Centre is the newest member of TPRG
London Graphic Centre is the newest member of TPRG
“When people ask my advice, I say go find a passion – you’re going to be doing this a really long time. I'm very lucky I did follow my passion”
A voice for reform
Paphitis believes that the industry will continue to go through a restructuring. “What you’re going to see now is voluntary restructuring, not necessarily through a process, but I do believe that all of us are going to have to look at our businesses.”
One restructuring he would be keen to see is that of the outmoded business rates regime, of which he has long been a vociferous critic.
He describes the current rates situation as “a quite unforgivable cop-out from the chancellor” and thinks it is representative of a government that he sees as being as “anti-business” as “any Labour government of the past” as extra costs are also imposed on employers.
He says: “Every time I hear a minister, the chancellor, the prime minister on television saying they’ve given the UK public a pay rise… I wasn’t aware that they were paying it, but they're claiming credit for it and business is paying it.”
While Paphitis’ businesses generate an increasing proportion of sales online, he leans towards an online sales tax, which he believes would create a more level playing field in which “hybrid retail” – his term for a complementary physical and digital operation – could thrive.
He argues: “The chancellor really is in need of cash. Why would he not collect all that unclaimed tax that’s out there? We’d be in the frame [to pay] as well but it would be fairer. I love my physical shops and I don’t want them to disappear.
“If you were collecting from big, online, billion-pound players you could afford for it [the rates and tax system] to be a lot more sensible.”
But bugbears such as taxes aside, Paphitis still relishes retail.
He says: “When people ask my advice, I say go find a passion – you’re going to be doing this a really long time. I'm very lucky I did follow my passion.”
That passion has provided employment for tens of thousands of people, breathed new life into retailers that might otherwise have failed and allowed him to share the benefits of his success and high profile.
“I like to give back; most people do,” he says. As well as Retail Trust, Paphitis has been a director of Comic Relief and supported causes ranging from the Royal Manchester Children's Hospital to Hideout Youth Zone.
While times are challenging, Paphitis has no intention of hanging up his hat just yet.
He says: “I’ll be 65 in 2024. All I’m going to say is that I’m prepared to do a review then but the outcome is certainly not going to be sitting on a beach – I’m never going to do that. I’ve got an itchy bum.”
It looks like selfies from the retail dragon will be in demand for a while.
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