R for Retailing
Take a risk or stick to what you know? I found out the hard way.
When I met the sixteen year old girl who would eventually become my wife she was working as a domestic servant, helping a young farmer's wife with house work, cooking and laundry. Not long afterwards she obtained a job as a sales assistant in the Hereford branch of a then well known chain of shoe shops. She continued to work in the same job until the birth of our son four years later. By then she was a senior sales person. She returned briefly on a part-time basis and when we moved to Coventry she joined the staff of that city's branch of a different shoe store chain.
In the early 1970s we took on an unwise amount of personal debt shortly before the regular overtime to which I had become used dried up. I took a part-time job working in a pub bar 3 week day evenings as well as Saturday and Sunday lunch time and evening. It helped but we still struggled financially. With both of us now having retail experience we wondered if purchasing a shop with living accommodation might offer a solution.
We looked at a few small shops but soon discovered that the cost of entering such a business was prohibitive, Whilst it was possible to obtain a mortgage of up to 90% of the value of a home, no-one was offering loans greater than 80% of the value of a house where part of the property was a place of business. Add to that the cost of stock, insurance and business rates and the whole idea fell apart.
Sixteen years later, with a significant lump sum sitting in our joint account and many more years of retail experience under Freda's belt, it seemed worth exploring the possibility of becoming shopkeepers once again.
The proprietor of a local kitchen fitting business had converted the ground floor of his premises into small shop units. We looked around the district asking ourselves what kind of shop was not represented and concluded that the area lacked a specialised outlet for glass and china. I did some research – in the local library since the internet was still a decade or so in the future. I found what the statisticians at Mintel had determined was the value of the market. If we could attract just 10% of that it would provide a living. And where better to locate such a business than close to one selling fitted kitchens?
It didn't take much to convince the proprietor of the kitchen business. Talking to wholesalers and manufacturers showed that we could have some stock on sale or return terms. It was all looking very promising. Until, that is, it came to pass that the kitchen business was in such financial trouble that the owner had to place the whole building on the market. The buyer had no interest in letting out the separate units. He was going to open a fast food outlet.
There were other premises available but none seemed quite right for various reasons. Then we saw an interesting advertisement. A business near our home, one which we had availed of occasionally ourselves, was being offered for sale. The owner, a chef, had developed the business selling ready prepared meals from his own recipes. The premises had formerly been a dairy and had a small kitchen and a large chill room.
To begin with the chef prepared the meals on site. The business was now so successful that he had made the decision to move into a factory unit where he could increase the volume of meals produced. He needed this because he had obtained a contract to supply his meals to one of the airlines based at Manchester airport. He would still be able to supply meals to the new proprietor of the shop at a discount that would provide a significant profit. In addition the shop had a chilled display for cheeses and other deli style products. It also had a licence to sell wine.
It certainly seemed like a proposition worth pursuing. We took over in September of 1987. Business was steady during the first weeks and overwhelming in the days before Christmas.
Some time around Christmas the airline cancelled the contract with our chef. So far as we could understand, a large company had been given the exclusive right to provide catering services to all users of the airport. Whatever the background, the upshot was that the chef's business was no longer viable and our USP had gone. We searched around for alternative supplies but there was nothing to match the unique quality of the chef's meals.
After Christmas business dwindled and we witnessed the downside of selling perishable goods. If you can't sell it in a timely manner you are scuppered. Not only have you incurred the extra cost of storing it in appropriate conditions but you stand to lose the original cost of purchase.
Within weeks we found that we were paying the rent and utility bills out of our personal accounts rather than the business account. We could not carry on like that for long. We decided to close the business less than a year after starting.
We should have foreseen that the growing market for prepared meals and other chilled foods would be attractive to the supermarket chains. Had we remained in business we could never have competed with the likes of Tesco and Sainsbury once they entered that market. Our premises were too small and located just off the main street where it lacked the necessary footfall. Yet moving to a premises in a better location would have cost more. Achieving the turn-over needed to cover those extra costs would necessitate the employment of someone to assist behind the counter.
At that time the Thatcher government had in place a scheme to enable unemployed individuals to set up small businesses. They received a small grant of start-up capital and a weekly payment somewhat larger than unemployment benefit. A young woman had availed of this scheme to set up a business making cakes in her kitchen. Following initial success she needed a more suitable premises and agreed to take on the lease of our closing shop, with its kitchen and chill-room.
She wanted to purchase the chilled display cabinet but could not raise the agreed price. We settled on monthly payment terms, reluctantly in my case. One day I went to collect the due installment. She was not there. In her place was another person whom she had engaged as a sales assistant. More significantly, the display cabinet was no longer in the shop either. In its place a newer, upright cabinet. After several unsuccessful attempts to get her to pay for the missing cabinet I was about to write the whole episode off as another consequence of my original bad decision to get into the food business.
One lunchtime I parked my car a few doors from my dentist's surgery. Walking from car to dentist I noticed a commercial refrigeration show room and there, in the centre of the window display, was my old cabinet. I entered the showroom and told my story to the proprietor. He accepted my version of events and gave me the agreed cash value of the cabinet. A happy ending of sorts. Nevertheless, I still sometimes wonder how things would have panned out had we been able to go ahead with the china shop idea. But 'what ifs' are just that. We will never know.