The power of six

As Stuart Rose, the CEO of M&S, says: “The British customer has never had it so good.” How is this possible? With rising rents, rates and fuel costs, an economy that may or may not be juddering towards stagnation, depending on who’s talking, a climate in which exploitative working conditions are becoming increasingly unacceptable (and harder to hide) and wardrobes that must be heaving with the all too tangible ghosts of trends past, how is it that the public keeps on buying (sales of clothing in supermarkets alone have risen by 94 per cent in the past five years, with clothing sales at Tesco last year standing at £750 million, up 16 per cent on the previous year). How much longer can shops continue expanding (Next is swelling into 20 per cent more space; Zara and Primark are both opening more stores, with the latter finally acquiring a high-profile, high-rent flagship on Oxford Street) and prices continue falling?

These men have some of the answers off pat, but perhaps the real testament is implicit in their personalities. Here are a few clues: a head for figures, a brain that can synthesise the minutiae of Gordon Brown’s every move as well as the long-term prospects for tartan and puffballs; an obsession with the weather (“You could be selling out of coats in September, or you might not sell one until November; you need to be able to turn your supply chain on and off vary quickly,” says Phil Wrigley, the CEO of New Look); an infinite appetite for jargon (they are variously mad about flexing, hitting the sweet spot and thereafter placing their ray on it) are all mandatory. So, too, are ruthlessness, an enormous enthusiasm for getting to know the customer (whether she’s New Look’s “typical public-sector worker” or M&S’s everywoman) and speed-freakery.

As is an ability to deal with global complexities, from the best place to source Day-Glo buttons to assessing the impact of the crisis in Lebanon on the price of your packaging. For anyone still in doubt as to the dog-eat-dog nature of retail, consider the cadavers of recently demised leviathans such as C&A, Olympic Sports, Allders. These rag traders all know each other, they can all switch on the charm and, as befits men who happily admit to having barrow- boy mentalities (and an appropriately impressive grasp of Anglo-Saxon expletives), none of them is above ringing each other up to josh about “the absolute s**** job” the other is doing. Oh, and they’re all raving optimists.

THE MAIN MEN IN WOMEN’S CLOTHING

Terry Green

Chief executive of clothing at Tesco. Green came to Tesco in 2005, having been chief executive at Topshop, Debenhams, Bhs, and the collapsed Allders chain. He describes his business approach thus: “I’ve always treated [retail] as if we were at war and I’ve got to defend our territory.” Despite a brash reputation, no relation of Philip Green.

Stuart Rose

Chief executive of Marks & Spencer. The dapper dresser who lists his interests as flying and fine wine joined M&S as a management trainee in 1972. In 1989 he moved to the Burton Group, then became chief executive of Argos, Booker (which merged with Iceland) and Arcadia, before returning to M&S in 2004. Relations with Philip Green were strained when Green launched two failed bids to take over Marks & Spencer.

Sir Philip Green

Owns Bhs and Arcadia, which includes Topshop. At 16 he left school with no qualifications. He began by selling shoes and old designer stock. Family wealth put at £5 billion. Known for his extravagant lifestyle (has a yacht and private jet, and Beyoncé sang at his son’s bar mitzvah), gives generously to charity. Knighted in June.

Phil Wrigley

Chief executive of New Look. Dropped out of an English degree at the University of Exeter because he “was too interested in making money”, then became a management consultant at Ernst & Young in 1978. He took on various management roles at Debenhams, culminating in appointment as finance director, before moving into senior positions at Bhs and Dorothy Perkins.

Stephen Sunnucks

European president of Gap. Appointed to his current position in 2005, has worked in retail for 27 years. He started out, at the age of 21, at Marks & Spencer and, among other chains, has worked for Sainsbury’s, the Burton Group and New Look. He was credited with turning New Look’s fortunes around thanks to a knack for spotting trends.

Mike Shearwood

Managing director of Zara UK. Started his career as an optician at Dolland & Aitchison, then in 1992 moved to Vision Express, where he worked his way up to operations director. He was appointed managing director of Zara in 2000. He has said that the retail sector can learn from the optical sector’s emphasis on service.

Compiled by Carola long

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Fashion is god: how London, New York Paris and Milan came to Tesco, New Look and the rest of the high street

“Three years ago we didn’t have in-house designers. Now we have nearly 30. Customers know much more than they used to. We did a focus group recently on our larger sizes and they all scan the internet to check out the trends. That’s completely different from 15 years ago. Fashion is god. That said, it’s about interpretation. An all-store line would be 20,000 units, but we can do small runs of 1,000, which across 540 stores is only 20 per store. Customers love that sense of exclusivity” — Phil Wrigley

“When I started out a retailer would say to a manufacturer ‘We want to buy some lorries’ and they would say ‘Sorry, we’ve made you tractors’. There were two collections a year, winter and summer. Now there are constant drops of new product. It’s completely demand-driven” — Stuart Rose

“The British customer is one of the best educated in the world. There’s a fashion section in every British newspaper, so they are up on every trend. Our store managers buy their own products according to the local clientele: what’s in Oxford Street might be different from Brompton Road. To increase exclusivity we limit the amount of every item we produce — even a successful garment will be modified during its production run. We’d rather do more designs than more units so when you go to a party you don’t bump into five people wearing the same dress. And when we do a designer interpretation it’s in the best fabric we can source” — Mike Shearwood

“Fashion drives people into the store but all that crap of buying samples just for the press and maybe putting the odd one into store is over. One of the biggest issues I face is space: 70 per cent of our stores only get 25 per cent of the range” — Terry Green

“The bar is constantly being raised, which is why Gap has drafted in local design teams and why we use people who also work with Prada and Balenciaga for our catwalk shows. What goes into store in the UK won’t necessarily always be the same as Gap in the US. Maybe some of it will be edgier. Maybe there will be competition among the different national design teams. That’s a good thing” — Stephen Sunnucks

The economics of global efficiency (or: how come it’s so cheap?)

“Twenty-five years ago 90 per cent of the product was made in the UK; now it’s less than 5 per cent. About 30 per cent is made in the Far East. It used to be more, but flexibility is crucial. We’re actually coming closer to the UK again: Turkey, Bulgaria and the old Eastern Bloc countries. Sometimes you offset the cost for more speed” — Stuart Rose

“We manufacture in small quantities so our stock holding is significantly less than traditional models, which is why we have so little discounting. The industry average sells something like 60 per cent of stock at full price. We sell 80 to 85 per cent, so we are able to deliver great value for money” — Mike Shearwood

“Your biggest risk is your inventory, so you need maximum control over your stock. That’s why these days we’re only producing 25 per cent in the Far East. The rest is made much closer to home. You can’t operate in isolation. When oil goes up the price of my carrier bags goes up” — Sir Philip Green

“I’ve been in this business 30 years and I keep thinking ‘Surely we can’t get any more margin’, but we do. And, yes, we make a profit on these £3 jeans, albeit pennies. It’s about efficiency — we’re always developing manufacturing hubs in new countries — Sri Lanka, Bangladesh, Turkey — and volume. Last year we sold six million T-shirts. A successful hit, cashmere, sold 100,000 pieces in a fortnight. And we’re up 16 per cent this year” — Terry Green

“We’ve actually just built two new factories in the UK. The costs are higher, but the hit rate is so great it evens out” — Phil Wrigley

More haste, more speed: how to shave hours off your production schedule

“In the old days you could do the designs, then order the fabric. Now you have to do it all simultaneously. We’re talking tens of thousands of metres. It’s risky, but if you’re waiting for mills in China to produce more material for a sell-out line, that can take a heck of a long time. By buying direct from the mills and bringing in our own design team, we’ve shortened the time from sheep to shop. You can’t faff around sorting out linings or buttons or trim either. It all has to be done ahead of time. The days of working sequentially are over. Speed is everything” — Phil Wrigley

“Our business model is different from the traditional because we have our own factories. We can produce something from drawing board to store in two weeks. We don’t sit on masses of made-up stock. Within four hours of an item hitting the floor, we can modify it on the drawing board. If customers tell us a kimono coat’s too short, we’ll lengthen the next batch” — Mike Shearwood

“Speed to market is key. I can change the wash on jeans going through a factory in 24 hours. If we’re manufacturing jersey, we can go from short sleeves to long with a phone call. Jane [Shepherdson, brand director at Topshop] changes things constantly. We’ve all got flexed production now. If something’s not working for us, we can’t ship it to another country like Zara can so we have to flex the supply chain as much as we can. What fabric can we hold? What can we adjust and so on?” — Sir Philip Green

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How low can you go (or: Honey, I Shrunk the Profits)

“Bhs will absolutely not be going the Primark route. Turnover is vanity, profit is sanity” — Sir Philip Green

“We started at £5 for our jeans, then Asda went to £4, so we went to £3. There’s no point going any lower. I’m not about to have a pissing competition just to get a headline. And we’re not doing cheap old rubbish. Customers wouldn’t buy it if we were. This is product we believe in and we can make profit on. My aim is for sell-through to reach 80 per cent at full price. We’re not there yet. Even though the average price on a garment is £6.80, there are still mark-downs. But we are massively profitable” — Terry Green

“There are some things you know aren’t going to be as profitable as others, but you do them because they’re good for your image. Not that we’d ever do a loss-leader — at least not deliberately. The trick is to sell as much as possible at full price, so that your margins remain realistic. The good news is that Italian mills are finally competing with the Far East, so you get amazing quality at high street prices. I’m happy to say that even at our low prices, our end margin is consistently higher than the competition” — Phil Wrigley

“The real price wars were started by the supermarkets when they entered the clothing game. Frankly, I can’t believe that they make money on a £3 pair of jeans, but in other products the margins are still much higher than on food — why else would they have gone into clothes? It certainly made the rest of us sit. up. We are cheaper than we were five years ago: prices have fallen 18 per cent year on year across the store even though rents, rates and fuel have all gone up. Hosiery’s 40 per cent cheaper than it was five years ago. How? By sourcing around the world, and increasing flexibility” — Stuart Rose

Holier than thou: how shopping became an exercise in ethics

“Look Behind the Label has been a high-profile campaign for us because our customers are concerned about ethics. They also want faster, cheaper fashion, and at some point there’s a contradiction there. We control the A-Z of our supply chain, but there’s always a risk that there’s something happening about which we’re not aware. Some people say that you shouldn’t buy from countries with small wages, but define small wage in Africa. Are you taking people off the streets and giving them a job?” — Stuart Rose

“If you count the components in a single garment — buttons, trims, zips, thread etc — it is very difficult to verify that everything has been made in optimal working conditions. The day that I’m 100 per cent happy about the ethics in our manufacturing process is the day that I’ll be complacent. We have someone with a degree in ethical trading heading a small team in the UK to focus on the ethics and we’re a member of the ethical trading initiative, but it’s complex. Paying a decent wage in Vietnam is not always enough because workers send it back to their families and go hungry. So the next step is to build an on-site canteen. Then we put two medics on site. We don’t market our ethics because our customers want it to be an implicit part of the deal. It’s good business. If you don’t have good working conditions, you don’t have good quality” — Phil Wrigley

“People always think that there must be something dodgy about cheap clothes. But we have a continuous rotation of checks. If we were to find anything nasty on a surprise visit, we would fine the factory. Oxfam carried out a survey a few years ago which found that if you don’t hire young people, they go into prostitution. I’ve worked for Debenhams and Arcadia, and Tesco has more people on the ground making sure that it’s all more kosher than any business I’ve worked in. But you can’t police it 100 per cent” — Terry Green

Ten per cent inspiration, 90 per cent optimism: what to do if it everything goes pear-shaped

“It’s easier to find a new use for thousands of surplus metres of brocade than something that’s already made up. In the worst-case scenario you sell fabric back to the supplier at a fraction of what you would lose if you had actually made up the garments. Mind you, you don’t want to get your tartan quota wrong, because that’s not easy to offload. Mass mark-down is a sign of failure, but sometimes you just have to get rid of it” — Phil Wrigley

“It’s quite hard to see how we can keep selling more and more volume. God knows where people put it all. Production costs are going to rise in China so eventually prices will become more realistic and we’ll have to become even more creative about the way we do business. I think that, increasingly, you’ll see retailers finding differing USPs” — Stuart Rose

“What concerns me is that there’s too much retail space being built. Do we need another 15 million square feet of retail, especially with internet sales growing? I don’t think that it will damage us, though. Retail will have to become more exciting. We have to keep investing in new ideas and work harder at keeping shopping part of people’s leisure time experience” — Sir Philip Green

“I don’t think that our retail sites are any more expensive than the competition’s. We don’t really advertise. The marketing budget goes into good sites and great window displays. Our UK sales are consistent with the rest of the world. We’re here to make money and we’re expanding” — Mike Shearwood