On the one year anniversary of his company’s launch, Dragon’s Den panellist and Boux Avenue founder Theo Paphitis talks exclusively to Kat Slowe about the business’ performance to date and the birth of a new retail reality.
“Boux Babies,” booms Boux Avenue founder and TV personality Theo Paphitis. “Boux babies everywhere.”
The enthusiastic intimate apparel chief executive is, as usual, in full flow as he attempts to explain why his brand has just introduced its third new ‘face’ within a twelve month period.
“Jacqui got pregnant and then Stacey got pregnant,” he protests, loudly. “They got pregnant! You don’t want to have someone and then lose them after one season. Congratulations, marvellous event, but not for modelling lingerie.”
Guy Ritchie’s wife Jacqui Ainsley and presenter Stacey Solomon have both headed campaigns for the company. Strictly Come Dancing’s Ola Jordan was announced last month as the latest body to step up to the role after the two former models successively fell pregnant.
“So, obviously Ola will be pregnant very soon,” Paphitis says, laughing,
“I got tweeted by Ola’s husband the other day. I’m going to tweet him back, I think, tomorrow. ‘Beware, Boux babies come after Boux modelling.’”
The Dragon’s Den panellist claims that he never went out with the intention to get a celebrity model for his brand, but after he saw the public response to Jacqui Ainsley, a professional model who just happened to have a famous husband, he realised the power of fame as a marketing tool.
“Celebrity does work, but it’s a double edged sword,” Paphitis says. “You get the right person, there’s great PR, great awareness. You get the wrong person, there’s rubbish PR and rubbish awareness.
“Ola has quite a broad appeal, she is not going to offend anybody… Maybe that’s why we’re trading well, because we’re more broad appealing then some of our competitors. My personal ambition for the brand is to make it into a worldwide brand.”
The entrepreneur hints that expansion abroad may occur sooner than anyone thinks. In the longer term, he says he will also consider acting on the considerable interest that Boux Avenue has received from the Middle East and Russia.
But, despite his plans for global domination, Paphitis has no intention of letting his domestic business slip. Paphitis, who, in 2006, sold his interest in La Senza UK to Lion Capital for a reported £100 million, is now competing against the fellow high street chain. The retailer was bought by Kuwaiti group Alshaya, earlier this year, after entering into administration and Paphitis is keeping a keen eye on any developments.
“It hasn’t closed,” he says. “There are still 60 stores. The ones they’ve kept are exactly where we are. They haven’t shut any next door to us. There’s a clue there.”
The recent sale has presented some challenges for the Boux boss, as the new owners slash prices in a bid to offload excess stock. However, Paphitis asserts that business is booming despite these concerns.
“The competition is still there,” he says. “The only thing we’ve having to put up with at the moment is them selling everything for a fiver.
“They’ve got all the stock from all the stores and they’ve shovelled it into the existing 60 stores. I say it’s frustrating, but we are still selling to plan and we’re three times more expensive. We’ve got better product, they’re selling old product. It’ll be nice when they get themselves together and go onto normal trading. So, the sooner they get through their old, crap stock, the better, really.”
For Paphitis, it is all about hitting numbers and, with the brand’s Christmas sales better than expected, so far the business is still on track. Having sunk his own money into the venture – with no external investment – Boux is a big risk for the Dragon. Yet, it is very apparent that he is not a man who is ever willing to do things by half. The phrase ‘you have got to spend money to make money’ is clearly an adage that Paphitis is very familiar with and he is not expecting to turn a profit with the company any time soon.
“We’re going to lose lots of money, next year, but hopefully by the end of the third year we’ll be where we want to be,” he says. “I’m saying, what do I have to take in a year, in this store, to pay the rent, rates, staff and leave a surplus? Now, I then need to multiply that many fold because I’ve got a full overhead of a buying team, marketing team and everything else, so I need to have a lot more stores. Six stores, eight stores, 10 stores ain’t going to cover that. The commerce is the important part for us and our 25 to 30 stores that we said we would open.”
Boux Avenue plans to have 18 to 19 stores open by Christmas and aims to complete the store opening programme the following year.
In addition to La Senza, Boux Avenue outlets will be competing against the rapidly expanding Calzedonia group and new entrant Victoria’s Secret, which is set to launch in the UK this summer. The umbrella company for the La Senza brand, Victoria’s Secret could prove a major test for the adolescent venture and Paphitis seems to have a healthy respect for the US giant’s business prowess.
“Victoria’s Secret is a great band,” Paphitis says. “They know their lingerie, they know their business and they’re spending a fortune coming into the UK. Do I think there’s room for both of us? Yeah. It’ll be interesting seeing how they cope with the UK consumer. At the end of the day, we’re selling a different type of product and the consumers will vote with their feet.”
Malls take centre stage in Paphitis’ strategy. In contrast to Victoria’s Secret, which is set to launch its flagship store on London’ Bond Street, the jewel in the Boux Avenue will be set in the capital’s Westfield London Shopping Centre. Launching this month, it will be the company’s 11th outlet in the UK. And, it has been designed to wow, with a massive shop front and an impressive press lounge featuring an onsite bar.
With the re-generation of the high street a key, topical concern at the moment, thanks in part to Mary Portas’ recent campaign to breathe life back into town centres, Paphitis view on the retail medium is somewhat controversial.
“I am a massive, massive fan of the shopping malls,” Paphitis says. “I love shopping malls… 25 to 30 stores will give you a huge swathe of the population… Historically, we used to need 200 stores to have a cross representation across the UK. Now, you’ve got 25 to 30 power centres where you need to be. The rest of it you’ll do online. You don’t need those other 170 stores in high streets anymore.”
Over the next five years, Paphitis predicts that more and more business will move towards the shopping centres and major retailers. Brands, he predicts, are likely to become increasingly restricted to department stores and e-tail websites. Like many retailers within the UK market, he also points to the existence of Marks & Spencer as a unique opportunity to grab market share.
“The big players are still controlling huge swaths of the market,” he says. “If you look at what Marks & Spencer controls, there is no other market in the world where one player controls such a large percentage of the market, so it has to fragment, it can’t consolidate.
“So, there’s room for us, there’s room for VS. La Senza’s moved aside a little bit and I do see some of the business going away from the department stores… Looking into my crystal ball, I do see that the next five years will be a massive change in the way that intimate apparel is brought.”
With his money quite literally where his mouth is, Paphitis’ business will either usher in a new dawn for retail or will prove to be one of its generation’s greatest follies. Either way, the man himself is sure to be remembered.
One of Paphitis’ employees, Laura, passes by outside his office.
“Did you find out about the name day?” Paphitis asks her, apparently continuing an earlier conversation.
He twists back and explains, “if you are named after a saint and it’s a saints day, then it becomes your name day.”
Are you named after a saint?
“Not that I was aware of, but according to Laura I was. Or, did you say I was a saint, Laura?”
“Yeh,” she responds, “maybe, it’s Saint Theo Paphitis day."
“I like the sound of that,” Paphitis exclaims. “That’s the ego going mad. Put him down.”