What attracted you to the Grainger Games business?
It was clear from when I first encountered the business that [Grainger founder] Stephen Bowyer had built a really solid foundation and developed a unique business culture, with a great team spirit.
I was also amazed by the speed at which the business moves, not only in terms of making decisions, but the pace it implements them.
What also impressed me is that Stephen has recognised the benefit of bringing in professional assistance from outside, and had begun that process by persuading Phil Moore, who worked at Gamestation for five years, to join as sales director.
I think the Grainger guys have quite liked the way they have been perceived as a ‘bunch of daft Geordies’ as then it’s been easy for people to underestimate them. However, not only are some of them not Geordies, none of them are daft.
What do you feel you can add to the business?
One area where I can contribute is to the store opening programme. I’ve experienced rapid retail store growth in the past; Holland & Barrett opened around 50 stores a year, Thorntons hit a peak of 100 new stores in a single year, while Bonmarché averaged 30 openings a year during my five years there.
The business will need to invest in support functions to underpin the new store growth, and from my experience at other value retailers, I can help manage this investment to generate the required returns.
How have you managed to attract investment during these tough economic times?
Many investors will tell you that the three things they look for are market leadership, potential for growth and strong management.
Whilst Grainger Games isn’t the largest specialist, the core buying and merchandising systems that were developed in-house are in my opinion market-leading and resulted in the business being described as: “the most attractive retail model I’ve seen” by an experienced retail analyst.
These systems allow the business to manage stock efficiently – as demonstrated over Christmas, when we continued to have available titles that other retailers had run out of. The week ending on Christmas Day was a sales record for the business and the sales in the following week ending January 1st were higher still.
There is also a very clear opportunity for growth. The number of stores has almost doubled in the past 12 months but there are still a great many towns that don’t yet have a Grainger Games store.
Is this rapid expansion in store count not a risky strategy?
Far from it. For me, the most courageous move took place nearly 15 years ago, when Stephen Bowyer started to expand from a single store. At that stage, any wrong move could have seriously set back the business.
The business has developed a robust new store model that identifies the financial returns expected from each target town. This allows us to be clear about which opportunities to pursue, whilst we have enough potential locations to consider that we can afford to walk away if a deal isn’t right.
We have retained agents to locate suitable stores, plus an excellent team to manage the store opening process. This is led by Keir Wells.
I think the best evidence that the approach is working is that every one of the new stores we’ve opened over the past 12 months is profitable.
Another USP of the business is that payback on the investment in a new store has always been achieved within 12 months, so freeing up funds rapidly for further expansion. Even the value retailers I’ve worked with have not managed to realise such fast returns on investment.
How has the movement towards digital impacted your plans?
One of the things I have noticed is that although there is some movement towards digital delivery, this continues to represent quite a small element of the market.
I’m not sure whether digital delivery is what most customers want. We are conscious of the need to develop digital as another channel alongside our traditional stores, but my guess is that the next few years will still see physical media being the preferred choice for the majority of consumers.
How have you managed to navigate through the downturn?
Since his arrival, Phil Moore has promoted a culture of providing great service and price, and I think enough of our customers recognise this to want to keep buying from us.
We find that when we open in new locations, we provide the lowest prices on the High Street so that before long we see other retailers’ prices reduce to our levels. Hopefully the fact that our store opening typically leads to a reduction in prices throughout a town is something that isn’t lost on consumers.
Second-hand has become very competitive lately. What are your thoughts on the competition?
I think we probably benefit from the coverage of the developments at the supermarkets and at Argos, as it raises awareness of trade-ins.
I do feel that offering trade-ins, plus selling pre-owned products alongside new, is quite a difficult business model to develop and implement successfully, so it will be interesting to see how the new entrants cope with this.
There’s a lot happening on the High Street, but what about online? When can we expect to see more from the Grainger website?
We are conscious that the opportunity available to us from our website has not been maximised in the past; however we are now seeking to move towards a more multi-channel offer, so there is much more attention being directed towards the website. It was upgraded just before Christmas, making buying from it much faster and easier. As a result, we enjoyed like-for-like growth of over 100 per cent through the Christmas period. Further website developments are scheduled to take place this year.
How do you expect the VAT rise to impact your business?
We have absorbed the impact of the increase in VAT and not passed this on to our customers.
Whilst there is a financial impact on the business of not increasing prices, some of this has been recovered through improved terms negotiated by Chris Harwood and his buying team – the rest, we hope, may be offset by a higher number of customers choosing to buy from Grainger Games.
What are your thoughts on the struggle indies are having in the market at the moment?
I think conditions must be tough for smaller independents now and sadly I can’t really see things becoming any easier for them in the future, which is a shame as many of them have real knowledge, expertise and passion for gaming. Those that do decide not to continue on their own may I hope see Grainger Games as their natural future home.
Who is Jonathan Fellows?
Grainger Games’ chairman Jonathan Fellows is a retail veteran. For more than a decade he has been finance director and chief executive at some major retailers including Lloyds Chemists, Thorntons, Bonmarché and American Golf.
“I’ve been fortunate to work with some hugely gifted and expert retailers – Allen Lloyd, who in my opinion was one of the most talented retailers of his generation; Michael Ward who is now managing director at Harrods; Tim Brookes who grew Jessops from 70 stores to over 250; the Chima brothers at Bonmarché; Richard Kirk at Peacocks; and Howard Bilton at American Golf,” Fellows tells MCV.
“I think and I hope that I’ve learnt from all of them and I guess I may be closing in on being a retail veteran myself now."