Entrepreneur Paver earmarks major Indian success
FAMILY shoe business Pavers has revealed ambitious plans to float its Indian operation when it reaches the £100m turnover mark.
Pavers has expanded into India and already boasts 35 stores and 140 concessions.
Managing Director Stuart Paver, who has been shortlisted in the 2013 Ernst & Young Entrepreneur of the Year award, said the York-headquartered business had aspirations to break into the top five retailers in the country in its field.
“The aim is to float the Indian operation when we get to £100m turnover, then give away 26% to 28% of the shares,” says Mr Paver in his office at Pavers headquarters on the outskirts of York.
“We want to be in the top three to five retailers in India by 2020 with 1,000 stores. And I think this will be driven by organic growth.”
Mr Paver, who was recently appointed to the UK India Business Advisory Council, has spotted an opportunity in India with Pavers Shoes having become the first foreign retailer to be allowed to set up wholly owned stores in the country last year.
Pavers’ plan follows a decision in 2012 which saw India allow 100% foreign ownership in companies that sell only their own brand of goods in the retail sector. Previously, such foreign companies could own only up to 51% of their Indian operations.
“We can see major growth in India,” explains Mr Paver, who has a coffee cup on his desk with the message ‘Keep calm and buy shoes’ on it. “Last year we did 95% growth. This year it will be 80% to 90%. This year we should be profitable.”
Mr Paver believes the company is capitalising on the Indian market at an opportune time as a growing middle class takes up Western trends and tastes in increasing numbers.
Turnover at Pavers to the end of January 2012 was £63m with pre-tax profits at £5.3m. Employees number more than 800.
Turning to the UK business, Mr Paver said Pavers was eyeing up acquisition targets and had put two bids in over the last 12 months. But he admitted that many in his field were “poor businesses that we don’t want”.
However, adding that the group was cash rich, he said: “There’s plenty of scope to grow the business around 10% to 15% a year.
That’s through organic growth and new stores. We’re not interested in turnover really; we’re just interested in profitability.”
Mr Paver said he was not concerned by the seemingly endless developments within online retail, and says that because his products are own branded and aimed at a more mature audience, customers have loyalty and also want to visit stores to try shoes on before they buy.
“We’ve built up a loyal customer base. There’s definitely a niche in the market and we’re filling it. We don’t have that much direct competition. Our customers tend to be very, very loyal to us. That’s why our sales haven’t gone down much in the recession.
“Our customers are looking for something comfortable and affordable. All the other operators have gone young and sexy.”
Pavers, which previously ran a mail order service and now has a successful website, is developing a ‘click and collect’ service that allows customers to order online and pick up in store, a tactic Mr Paver believes will lead to increased sales.
The company has also reduced the number of items it sells online from other brands.
Looking forward to future prospects, Mr Paver said: “We believe we’re really well set up when consumer confidence picks up air speed. We think it will lead to a large pick up in net profits when that confidence returns.”
Rachel Engwell, Yorkshire tax director at Ernst & Young, said: “Companies cannot afford to wait for traditional markets to recover. In rapid growth markets, such as India, their economy is being driven by an emerging middle class, cost competitiveness and a large skilled workforce.
“Retailers are expanding their presence in overseas markets through routes such as, online sales, localised concessions and own branded stores.
“Whilst international opportunities should be explored, firms must not lose sight of getting the basics right. A deep understanding of the customer, supply chain efficiencies, employee incentivisation and multi-channel routes to market, are where successful retailers are distinguishing themselves.”
Keeping it in the family
STUART Paver says his children are interested in succeeding him at the company but not until they each reach the age of 28.
The managing director has made the stipulation so that his kin can experience other things before they think about joining the family business.
“I’ve said 28 so they can get experience outside so they could bring something else into the business,” he explains. “If you’re not careful with a family business you can be left with people who can’t get a job anywhere else.
“It’s far better to keep everyone out for a while, let them live a little and then their expectations are much more realistic.”
Pavers was founded by Mr Paver’s mother, Catherine in 1971 and he is keen to keep the company in family control.
Commenting on the company’s structure at present, Mr Paver said he had brought in non-family members in senior management roles so he could gain new viewpoints and ways of working.
“We work very well as a team here and the outside people we have brought in have proved their worth.”
Asked how he believes he is viewed by his employees, Mr Paver said he hopes his enthusiasm is taken note of: “People say I have many ideas and that I’m always saying that everything is easy and that when I have an idea it can be implemented immediately.
“I’m good at ideas but not so much with implementation and it’s about supporting other people with those skills.”
Rachel Engwell said: “Family businesses derive great strength from their long term perspective; thinking not in months, but in generations. They are not exposed to the demands of shareholders looking for profit maximisation. In it for the long haul, such companies tend to have loyal employees, a strong customer focus and overall, a succession plan.
“Family firms are much more aware that they need outside influence from non-family executives, to inject new ideas. In fact, as in Stuart’s case, they are encouraging the next generation to spend time outside of the business to bring back valuable experience before they take up management roles.”
