Dragon takes the plunge into lingerie
Theo Paphitis tells Laura Chesters why he is making a second foray into the women's underwear sector
Sunday 12 June 2011
Theo Paphitis has nicknamed his mirrored Maybach 62 Mercedes-Benz the "chromobile". "You can put your lipstick on looking into it," he says.
So proud is he of it that he parked it outside Sketch in Mayfair when he hired the club for the launch of his latest business venture – a lingerie chain called Boux Avenue.
The chrome-plated vehicle that Paphitis created for Red Nose Day earlier this year is typical of the flash Cyprus-born businessman who has risen to fame after building various retail businesses and his appearances on The Dragons' Den and publishing his book Enter the Dragon.
But sitting in the head off ice of Ryman, his stationery business, in Wimbledon, the flashiness is much more toned down. Paphitis's office is nondescript and hidden away in the corner on the second floor of the slightly shabby office block.
Despite the glamorous lifestyle, Paphitis is surprisingly down to earth. He runs Ryman from this low-key office as well as Boux Avenue.
Paphitis is a self-made man – his first business venture was starting a tuck shop at school. After stints in insurance at Lloyds of London and working as a salesman in Watches of Switzerland on Bond Street, he progressed to a finance broker and specialised in company turnarounds.
"But this isn't work. This is what I love," he emphasises. He doesn't differentiate life from work. "This is seven days a week. I start when I get up before 7am and I work until 9pm."
He spends a day a week in the office and the rest of the time is running the various areas within Ryman and Boux. He is also co-owner of the gift experience business Red Letter Days. He runs between checking ranges, looking at stores, meeting buyers, suppliers and, of course, his publicity appearances.
So, for someone with so much experience in the retail sector – he has been doing it for more than 20 years – why has he set up a business selling knickers to British women who are notorious for not spending much on their undies, in one of the toughest consumer slumps in living memory?
"We knew we were launching this in a volatile climate. I have never been a trailblazer. I haven't been the first to do anything. But when I bought Ryman people told me about the paperless office and warned me about the future of stationery shops. But I vehemently disagreed."
Paphitis stands up, walks to the door and touches the wooden frame. "I am superstitious," he explains. "I thought there was an opportunity and so far I have been right."
But Paphitis predicts change is coming for the high street. "We are in an incredible momentous time. Of course we are going to see change. I see it is like a new industrial revolution. But this isn't happening over 100 years. It is happening over 10 years and the clock has already started."
Boux Avenue has been trading for just over two months and has six shops and a fully functioning website.
Paphitis chose lingerie as he knew the sector from owning La Senza. He famously bought the brand for "a pound and two packets of Benson & Hedges", sold it for £100m, and then tried to buy it back again from private equity owners Lion Capital. His bid did not succeed so he set up his own version from scratch, creating a website where shoppers can have their embroidered plunge bra delivered at home.
The prices are in the mid point of the high street – £28 for bras and £12 for knickers – but Paphitis says the difference is in the service. The Boux Avenue name was created from meeting a "dazzling French girl named Boux" while the Avenue part was inspired by New York. He says: "Boux is an internet business but with shop windows – the stores. Everything is about the experience. The stores are sensual like a boudoir. Sexy but not sex."
The UK lingerie market is tough. British women tend to buy their underwear mainly at Marks & Spencer, La Senza or in giant supermarkets that sell everything under one roof, or even Primark.
The former Millwall FC chairman argues: "Why would a woman want to buy her most intimate clothing at the same time as buying a ready meal or a frozen chicken. Some retailers have conditioned women into thinking that they only want lingerie at low prices, but British women can be adventurous. La Senza has reinvented itself to be younger and sexier. And we are delivering something at Boux Avenue that is sexy but at the price point that British women want."
At Boux Avenue shoppers can sign up to a loyalty card where they will get points for every pound they spend. If a size is not available in the store, the shopper can pay and get a delivery at home the next day straight from Paphitis's warehouse in Crewe.
But the lingerie market is set to get crowded. US-owned Victoria's Secret is planning a UK launch and has signed up for a store in Bond Street and is also eyeing Stratford City shopping centre in London.
Paphitis is under no illusion that he has his work cut out. The sector is worth £3.5bn and M&S has a 27 per cent share of it. He is fully aware of how failure can visit the most experienced businessman. George Davies – the man behind George at Asda and Per Una at M&S – had to close his fledgling Give chain last year.
"It was a great lesson. If George can fail then really anyone can. I am a massive fan. When he dropped the ball – and he did drop the ball – then there is a question that I could drop the ball. We believe we are able to fail. But this keeps us focused."
As he speaks, Paphitis receives a text from his wife asking if he will be coming home for dinner that night. He is, but not till gone 9pm, and it will be the first dinner he has had at home in two weeks, he says. But his his wife and five children aren't sidelined. "I love holidays and we have plenty of them. I take every school holiday off. This time it was Monaco and this is being followed by the south of France."
And he can afford to take some time off. He says: "The early impression for Boux Avenue is that we have got a lot right, so we are smug. But it can be taken away again, just like that. We have beaten our targets so we are pleased but not complacent."
Paphitis hopes to have another four stores open by Christmas and is just finalising the details of a shop in the Metrocentre in Gateshead.
He hired Guy Grainger at Jones Lang LaSalle to look for stores for Boux Avenue. Grainger says: "For most landlords of shopping centres the arrival of a new brand is very exciting. But, there are still some landlords whose primary concern is securing the highest rent which means it is difficult for new businesses to establish themselves in certain areas."
Paphitis still believes there is still a reason to open shops, despite the big rents in many locations.
"I believe shopping is a pastime and this is not going to change in my lifetime. But retailers have to look at stores. They need to make sure they have the DNA of future shopping habits – the technology and the service."
With that Paphitis is off to another product meeting – more knickers and bras. "It is a really tough job."
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