A screwy way to make a million
Roger Trapp looks at a company that proves you don't have to have a costly product to succeed
Sunday 14 March 1999
Since the early 1990s, this company, based in Yeovil, Somerset, has seen turnover double every year simply by being dedicated to supplying tradespeople and DIY enthusiasts with screws and related products by mail order.
As a privately owned operation based in the West Country, it is little known. But in the year to the end of January, it achieved sales of pounds 28m and is projecting to boost these to pounds 48m next year. Moreover, it claims to have Buckingham Palace and London's Tate Gallery among its customers, while Eton College is one of the 10 per cent of schools that order their supplies through the company's catalogue.
David Cox, chief executive, says his company's promise of next-day delivery, wholesale prices and a full range of products has enabled it to establish a niche between the traditional builders' merchants and the DIY "sheds" that have sprung up outside town centres.
The story started in 1981, when Jon and Jenny Goddard-Watts bought a small company that sold screws through Exchange and Mart. In the following years, they added two other companies in this field to the Woodscrew Supply Company and acquired a reputation for selling good-value products. By 1993, when they combined the companies under the name Screwfix Direct to create a comprehensive telephone ordering service for building supply products, turnover had reached pounds 350,000. Mr Cox attributes much of this early success to the "real passion" that Mr and Mrs Goddard-Watts brought to what many would regard as the prosaic business of selling screws.
The focus on attention to detail was continued when the couple's two sons arrived in the business. One used a background in logistics software to create a distribution software package, while the other had an intuitive feel for what tradespeople wanted and set about expanding the product range. These initiatives led to even greater success. But, crucially, by 1997 the company had reached the point where the founders felt there was a need to hire a professional manager.
This is where Mr Cox, who had worked in an engineering business and set up an interactive games company before taking an MBA, came in. The family members are still involved - Mrs Goddard-Watts looked after the books until a head of finance was appointed last October -but Mr Cox has been made chief executive with overall responsibility for the direction of the company.
Mr Cox is insistent that the company should not sacrifice quality and service in the name of growth. Pointing out that about half of new orders come from referrals and recommendations, he says: "We want to maintain growth by reputation."
Being a privately owned business that is cash positive and not answerable to shareholders has played a significant part in being able to do that, he adds.
"What it means is we'll take risks. If we want to put something in the catalogue, we'll do it. If it works, fine. If it doesn't, we'll take it out again."
He acknowledges that this can be demanding and does not suit everybody. Some people leave quite soon after joining, citing how hard the work is.
"The biggest problem we have with managers coming in is that we have to train them to be `inefficient'. The culture of most organisations is to be cost-effective today. We're not interested in cutting costs to the point where we see what we can get away with," he says.
Instead, he takes the view that since the UK repair, maintenance and improvement market is said to be worth pounds 9bn, with a broader definition doubling the size, there is plenty of business to be won yet.
Moreover, with the company venturing into electronic commerce, it is looking to expand into continental Europe.
Growing acceptance of mail order has got the company this far. Now technology looks to be taking it further. "It's been said to us before that you could never sell screws over the internet. We believe that we will certainly prove our doubters wrong," says Mr Cox.
If you think your firm qualifies for inclusion in the league based on annual sales growth over five years, then send for an application form to Philip Rego, KITE/Independent 100, Willoughby House, 439 Richmond Road, East Twickenham, Middlesex TW1 2HA.
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