'I did not arrive with a pot of gold,' says Sir David (formerly Davoud). Nor is he a major shareholder in Coats. But last week the N Brown mail-order group, of which he and his family own 58 per cent, continued an impressive growth record as it announced interim profits up by a fifth to pounds 11m. The company is now valued at pounds 350m.
This spectacularly successful investment was made, not after spotting one of the young go-getters he likes to back, but by noticing what his wife was reading one evening in the late 1960s at their home in central Manchester, when he had already built his textile interests to a useful size.
'It's the Grattan catalogue. It's marvellous; you can shop from your armchair,' she said.
'Where did you get it?' he asked.
So next morning, instead of leaving for work at six as usual, Alliance hung around until the cleaner arrived at 8.30am, and interrogated her about why she liked mail order. He was fascinated. 'Suppose you go to a shop and you ask the girl for a particular dress to be delivered, in the right size and colour, to your home for you to try on in private and keep for seven days to see if you like it. Then you can decide whether to pay by cash or credit and post it back for free if you do not. What would be the reaction of the girl?' He pauses dramatically for a laugh.
Then the sales pitch starts. 'In direct mail, this is what we offer.'
He carried out some research and bought a small mail- order business, which used agents to market the catalogues and collect payments in return for a 10 per cent commission.
He then decided to look more deeply into how to get more agents for expansion and toured Manchester council estates trying to find out more about how the agents operated.
'Every door went 'bouff' in my face] So a few days later I went round dressed as a student, and I told the housewives my father had ordered me to find out about this magazine (the catalogue). They were sorry for me. I got seven cups of tea in seven homes and they told me all about the agents and how they worked.'
Alliance realised that using agents meant people knew all about what their neighbours had bought and how much they owed. It was too complicated.
'So Isold my agency business and decided to buy a direct mail order company.' This would send catalogues direct to customers' homes. He wanted J D Williams, a well-established family firm. So his principal company, then called Simpson & Godley, sold a wholesaling business and used the proceeds, plus its own resources and borrowings, to buy J D Williams for pounds 1.4m.
Buying J D Williams was easier said than done. 'We made every effort, including using Rothschilds' might. Jacob (now Lord) Rothschild approached them but was rejected. So I asked a colleague who was a member of the same Conservative Club as the Williams family to make friends. It worked.'
J D Williams needed computerising. Alliance took a trial order form to a psychological expert he knew in Cheadle. 'The psychological expert said: 'This sheet will frighten the customer.' So we sat down and worked into the early hours of the morning to reduce the text and make it easier to read, and decided to colour it light yellow to be friendly.
'The staff were worried about computers because another of our companies, Ambrose Wilson, had had great difficulties installing them. I said a computer was just a donkey and a parrot, a donkey because it has no brain, and a parrot because it can only copy what you do. It's an adding machine. But in order to justify the high prices the manufacturers make it a mystery.'
J D Williams was subsequently sold by Alliance's main company, which was to become the quoted Coats Viyella, and then reversed into a small listed property company, N Brown, in a transaction partly financed with bank borrowings.
'In order to expand we needed outside shareholders for both textiles and mail order, and we needed to separate the two businesses to focus them.' This did, however, allow his family to retain control of the lucrative mail-order activities.
N Brown now has about a quarter of the growing direct mail order market - though agency businesses like Grattan have not exactly disappeared. Alliance advises on strategy, and he and his younger brother Nigel sit on the board, but he has always employed dedicated chief executives so that he can concentrate on Coats Viyella.
Ishbel Macpherson, a director of Hoare Govett Corporate Finance who acted for N Brown when at BZW, confirms this: 'It's a strong management team, by no means Alliance puppets.'
N Brown's diversification into financial services through Morfitt & Turnbull has 'not done so well', Alliance says. The company lost money last year, though the estate agents Dunlop Heywood has returned to the black.
However, N Brown has now expanded into new catalogues. These include Classic Combination, which offers better-fitting clothes based on 50,000 measurements of real women, rather than the decades-old sizing formulae which assume that larger bodies are larger in every dimension.
'The breast measurement has become bigger since the War, and the hips have become bigger. But that does not mean the shoulder, for example, is larger,' says Sir David.
Anyone who had invested pounds 1,000 in his company 20 years ago would have seen it grow rather faster than the average woman's measurements. That pounds 1,000 would be worth about pounds 100,000 now.
(Photograph omitted)Reuse content