C&A ends secret counter-culture

News Analysis: The famous high street name hopes radical changes will halt its market share fall

C&A, ONE of Britain's most secretive retail companies, yesterday announced a radical overhaul of its operations designed to stem the loss of market share and transform the company into a more resilient force on the high street.

The retail giant, run by the wealthy Brenninkmeyer family of Holland since 1841, has developed a reputation for rarely giving interviews, never publishing its financial results and cloaking operations in a veil of family-dominated secrecy.

But yesterday it tentatively embarked on a partial revolution, with plans to shake up its store portfolio, its buying operations and the cautious business culture. It also pledged to be more open about its operations, ending 157 years of secrecy.

C&A is closing six stores, affecting around 160 jobs. It is also making 83 of its UK managers redundant as part of a streamlining operation. Its disparate collection of over 20 clothing labels will be reduced as C&A embraces "brand management".

"These things are always painful," says C&A spokesman Chris Williams. "The redundancies are a particular shock as this company has operated a `cradle to grave' philosophy. The culture was of a job for life."

The move is part of a series of changes gradually being introduced by C&A. Last year it appointed non-family members to the UK board for the first time in an attempt to gain external expertise. It has centralised its buying operations in Brussels to cut costs and announced plans to spend pounds 200m refurbishing its remaining 114 UK stores. The retailer also plans to broaden its range of prices in an attempt to shed its bargain- basement image.

"This is a major initiative for us," Mr Williams says. "We had started to look old-fashioned and there was a perception of C&A as slightly downmarket. This is all about adopting a more customer friendly approach."

The six stores to close - in Birkenhead, Blackburn, Salisbury, Shrewsbury, Southport and Walsall - will close after January 1999. No buyers have yet been found.

The plans were announced to staff on Wednesday. The redundancies were a shock. "Some managers feel terrible about this," Mr Williams says. "They say: `Our approach has served us well for so many years, why do we need to change?'"

But industry data reveal that change is urgently needed. Between 1994 and 1997 C&A's sales barely moved, rising by less than 5 per cent from pounds 830m to pounds 868m. In the period it lost a tenth of its share of the UK clothing market, slipping from 4.4 per cent to 3.9 per cent.

Although its high street rival, Littlewoods, has also struggled, Marks & Spencer has increased its stranglehold on the sector, while the supermarkets such as Asda and Tesco have been gaining sales at the lower-priced end of the market.

"You only have to look at the success of retailers such as New Look, Matalan and the supermarkets to see why C&A has been losing market share," says Clive Vaughan of Verdict, the retail consultants.

"It is always difficult for large, family-dominated companies to change. But Littlewoods [run by the Moores family] has been through it and Marks & Spencer and Boots have stripped out layers of management," adds Mr Vaughan. Clark's shoes, the family-controlled footwear retailer and maker, has been through a similar modernisation.

The changes are a radical departure from the usual business philosophy of C&A, whose culture is rooted in the Dutch-Catholic origins of its founders. It was founded in 1841 by the Dutch brothers Clemens and Augustus Brenninkmeyer, whose ancestors were linen and textile traders in the 17th century. Having left their home in Mettingen, Germany, they opened a warehouse in Sneek in Holland that year. The first real shop did not appear until 1861, also in Sneek.

Expansion into Britain followed in 1922. C&A now has more than 550 stores in 11 European countries. It also has associated businesses around the world, although they do not all trade under the C&A banner.

As the business grew so did the wealth of the Brenninkmeyers, who rank among the world's richest people with estimated net worth of pounds 4.5bn.

A staunchly Catholic family, they are said to be famously tough on their children. No member is given a job unless they get a thorough grilling at the annual family board meeting. In the old days the choice was often between the business or the priesthood.

But the cult of secrecy is ingrained. C&A remains an unlimited company, meaning that the family is ultimately liable for the company's entire debts. This also means the business does not have to file accounts.

A Dutch journalist once overheard a family elder remark that "openness is a sign of weakness". Family members sit on every board in every country where it operates. A market flotation, therefore, is not on the agenda. All investment is funded internally.

The Brenninkmeyers are reported to grade themselves by numbers that denote each individual's place in the hierarchy, which is said to embrace more than 2,000 people. It has been said that senior employees sign an oath of secrecy and communicate with head office through a code word. The code, the name of a street in Holland, is no longer used.

Access to the family is still difficult to gain. Contact is more likely to be made with the two non-family UK board members, Dennis Robinson and Norrie Fairbairn. "They [the family] are very low profile. They do not show their wealth off, but they do a lot of work behind the scenes, for charity and so on," the company says.

In the UK, the chairman is Mark Conrad Brenninkmeyer, who is in his London office most days. Another Brenninkmeyer, Stephen, sits on the UK board.

"In the past people would make things up [about C&A] and we wouldn't do anything to correct them," Mr Williams says. "Now we are trying to be more open." In June the company announced its financial results to its managers for the first time, but there are no plans to make them more widely available.

C&A may be an odd beast but it has a place on British high streets, experts say. The business has a strong following and its value-for-money offers certainly suit the current economic climate.

The group ranks fourth in the UK clothing market behind M&S, Arcadia and Next. Mr Vaughan of Verdict says: "The things they are doing sound very sensible and other family-dominated groups have proved it can be done."