Schuh puts its best foot forward at home and overseas

 

Footwear retailer Schuh has been a stalwart of UK high streets for the past three decades. Managing Director, Colin Temple, talks to Gameplan about growth, technology and overseas expansion.

Colin Temple

Managing Director of Schuh, the footwear retailer initially founded in Edinburgh in 1981. In 2015, he was named as one of the top ten most admired company bosses in a survey by recruitment firm Glassdoor.

Colin Temple

Colin Temple At a Glance

“The Schuh journey has been an exciting and eventful one, but 2011 was our truly transformative year. The catalyst came in June, when we were acquired by US company, Genesco. That changed us from a cashflow business into a growth business, and we haven’t looked back,” says Colin Temple, who joined the firm in the 1980s and became Managing Director in 2003.

At the time of the acquisition, Schuh operated 57 stores; now it’s 123. It was also a time when many other retailers were buckling under the pressure of a challenging market, reducing investment and closing stores. That, says Colin, provided opportunities. “The property market was a little softer and the ready finance from our parent company proved to be an accelerant for growth. We were also a small business growing up, as opposed to a legacy retailer contracting.”

Business to benefit all – putting people first

In a unique move that underpins the culture of Schuh, all staff shared in a £25m profit-related bonus on the sale of the business. “Our mantra is that everybody should do well from the business,” says Colin. “I like to say that we’re capitalist pig-dogs, but we do have some egalitarianism about us.”

Tongue in cheek it may be, but it’s an approach that secured Colin a top ten place in a list of top company bosses in 20151. “Joking aside,” he says, “It’s not really about me, it’s about the business. It’s a great business with a great team – I just happen to be the MD.”

Colin remains clear about where his priorities lie. “The way I describe our business is people, product, processes. You need to look after your people – and by that I mean customers and staff equally. If you do that, and have a good product and get your processes right – the technology that underpins your operation – then profit will come. If you’re a profitable business, things are pretty good.”

Technology innovation for faster payment

Getting the processes right has been an area of particular interest in recent years as digital capabilities have opened doors. An innovator in mobile payments, Schuh’s smart use of technology has underpinned its customer service.

“Technology plays a vital role in our business,” agrees Colin. “We have no price elasticity, our costs are pretty fixed and we’re in the ‘want’ rather than the ‘need’ business. One area we can control is the number of staff in store. If we can increase productivity by giving them technology to serve customers more quickly and efficiently, that’s a win.

“Using mobile payments technology to stop customers having to queue at the tills is a good example. Technology is a tool to be leveraged. That’s why we have our own IT teams writing our own systems, avoiding reliance on third parties.”

Making technology work for business growth

For businesses keen to use technology to better effect, Colin has the following advice:

  1. Be a problem solver
    “Start with identifying the problem you want technology to solve – rather than just using tech for tech’s sake.”
  2. Put yourself in customers’ shoes
    “Understand your customer’s journey and where the pinch points are – for example, where might they abandon a purchase? Collect and analyse data to improve your understanding.”
  3. Consider the value
    “Ask yourself – will a technology investment generate more sales, make us more efficient or enhance the customer experience? If it doesn’t tick at least one of those boxes, think twice.”

Ultimately, any technology investment is about knowing your market and your operations – and using that knowledge to spot the difference between a gimmick and an opportunity to add real value to the bottom line.

Overseas expansion

“I’d like to say we could pick the location out of a hat…but in truth when we started to explore Europe, there were issues we had to consider.”

This kind of attention to detail was crucial in Schuh’s most recent growth venture – opening two stores in mainland Europe in 2015. “I’d like to say we could pick the location out of a hat,” Colin says when asked about the decision to branch out overseas, “but in truth when we started to explore Europe, there were issues we had to consider.

“As an American-owned company, we had to be mindful about the rules and regulations on issues such as corruption. For us, that meant places like Belarus and, to a certain extent, Russia, were off our radar.

“Also, I initially thought Poland would be a good option but it’s actually a very mature retail market that’s over-shopped. The three key markets within Europe are the UK, France and Germany. France has some very unique labour laws, so we perceived it as a little tricky, so ultimately we saw Germany as having the most potential for our first foray into Europe.”

Currency swings

“Technology is a tool to be leveraged. That’s why we have our own IT teams writing our own systems, avoiding reliance on third parties.”

Having launched in Oberhausen in March 2015 Schuh is continuing to expand, and its third German store will open in Essen this year. But identifying a country to expand into was just the first challenge of Colin’s overseas adventure.

“The swing in the Euro has meant we’ve had to watch prices closely,” Colin admits. “That means going with local pricing in the market rather than employing an arithmetic exercise that takes a UK price and converts it back to a European one. Currency swings mean profit swings - international trade means dealing with uncertainty.

“On top of that, we trade in euros and sterling but that is remitted back to our American parent and translated into dollars. When we did the deal in June 2011, our conversion rate was 165, now it’s down to 142. That’s a 20% difference. So we would have to grow something like 18% more just to stand still in dollar terms.”

Challenges and opportunities

Schuh continues to grow, although Colin identifies a number of challenges facing retail businesses:

  1. Tracking trends
    “Fashion is fickle. But we’re also competing against a wider category for disposable spend than say 25 years ago, so it’s a strong market with good demand.”
  2. Protecting your edge
    “Retail is very visible. When you come up with an innovation everybody can see it working, customers expect it and other retailers jump on board. There are no ‘secret ingredients’ that you can keep to yourself.”
  3. Matching expectations
    “Customer expectations are rising. Take deliveries and returns – it’s a crazy retailer now that would charge for delivery, because free delivery is simply expected. But prices haven’t increased to reflect that.”
  4. The Amazon effect
    “The advent of different trading models, like Amazon as an e-retailer trading on price, means that people can see something in store but then try to source it cheaper elsewhere. Competition is fierce – you have to offer the best all-round experience you can.”

However, there are opportunities too. Great supplier relations place Schuh in a strong position to react quickly and sell when the latest fashion trend hits the high street. The company’s stores in Germany are trading well and there’s room for expansion within the domestic market too.

“I'm a dreamer with my feet on the ground,” remarks Colin, “In the early days we travelled to New York to go and see what the best retailers in the world were doing. The reality now is that the UK can hold its own with the best, and we’re proud to be a part of that."

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