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Foyles fires up its brand

28.02.08 Sarah Butler

What would Christina think? Staff at Foyles, one of the best-known names in ­British book retailing, handed out red roses at the Valentine’s Day opening of its store in the shiny new St Pancras station, and will open its first shopping centre outlet in White City, west London, in October.

It is all a far cry from the world of the firm’s legendary owner, the late Christina Foyle, who ran the ­Charing Cross Road flagship almost as a ­chaotic and eccentric extension of herself.

But her nephew Christopher, who took over the running of Foyles just six days before his aunt’s death in 1999, says he will continue to look for new opportunities to take the firm forward. "We are not going to rest on our laurels," he says. “No business can afford to do that.” He has already changed the bookstore, once famed for its indecipherable reference system and Soviet-style queues, into a modern, comfortable shopping experience.

The old, decrepit bookshelves were chopped up and given away as souvenirs, and Foyle spent £4m revamping the flagship store, adding a website, computerised stock system and new tills. In 2005, Foyles opened its first new branch since the firm was founded in 1903 by Christina’s father William Foyle and his brother Gilbert. The new shop opened  at the Royal Festival Hall, marking the start of a new strategy based on stores in interesting locations that gel with the Foyles brand.

“It is not our ambition to emulate the chains,” Foyle says. “That seems to be a business model that has not worked very well and is changing.”

While he insists he has never had a “strategic plan” with clearly defined goals, Foyle says: “All the time, what we are looking at are special opportunities that we think are exploitable,value-added places that are synergistic with our name and brand and profile in the market place.”

A sneak peak at Borders

It is a tough world for an independent bookstore to expand in, with heavy competition from larger retailers such as Amazon.co.uk, Waterstone’s and W H Smith, not to mention the recently bought-out Borders. Incidentally, Foyle admits he “took a peek” at Borders, but rejected the idea of a buy-out. “It made us feel a lot better about ourselves,” he says with raised eyebrows.

Foyle says the family-owned business has an edge because the flagship Charing Cross Road store is unique as a browser’s heaven, with a broad and deep range of stock in a wide variety of topics, from medicine to computer programming. He also believes that Foyles can tap into retail developers’ thirst for “something different”.

Both the St Pancras and White City stores came about because developers did not want the usual chains that can be found on every high street. Foyle says: “St Pancras specifically selected us because we are unique, not part of an anodyne international chain. Many of the other shops there are also individual stores owned by private entrepreneurs.”

While neither White City nor St Pancras will offer anything like the range available in the 38,000 sq ft Charing Cross Road store, Foyle hopes to offer a taste of the original experience. The St Pancras store will have 7,000 titles, including paperbacks and bestsellers in a higher proportion than its flagship store would ever have. But it will also stock literature in translation and books in French, German, Italian and Spanish to reflect its location at a hub of ­European travel.

Developer’s choice

The firm has had approaches from other developers looking for something different to brighten up their shopping centres, but at present there are no plans to expand outside London, despite a yen from developers for franchise stores abroad in the Middle East or the Far East.

Sam Husain, Foyles chief executive, says the White City store, which at 12,000 sq ft will become the company’s second-largest store after Charing Cross Road, was a special opportunity. “Westfield [the Australian shopping centre developers] modelled the site on Selfridges, and that is the reason that we are going there,” Husain says. “We had to be satisfied there would be no brand erosion.”

He says that despite the new openings, most of the bookseller’s big wins have, and still can, come from running the Charing Cross Road store more effectively.

When Foyle took over the business, sales were falling by 20% annually and turnover had dropped to £9.5m. “After a year, that stopped. We are not sure why, but obviously we think it is our brilliance,” he jokes. The chain then achieved double-digit growth and went into profit two years ago. But after the July 2005 bombings in London, sales took a downturn and remained at an “unsatisfactory level” until last year when the store returned to growth.

In the year to June 2006, the business made an operating profit of £85,472—an improvement on a loss of £66,800 a year before. However, after interest, Foyles made a loss of £29,777 in the year to June 2006, partly as a result of paying off Mike McGinley, the former chief executive, who left, apparently, after his hopes of staging a management buy-out were dashed.

Foyle says Christmas trading in 2007 was good after a “mediocre” Christmas in 2006, and the business is now back to double-digit sales growth. Last year it made a small loss, but Foyle anticipates turning that around to break even this year.

Managers empowered

That success is partly the result of a new emphasis on empowering store and department managers since Husain joined Foyles in May last year. Managers can now earn bonuses relating to the performance of the business, and are responsible for the profitability of their section. They also have much more say in the kind of books stocked, holding weekly meetings with Husain and Foyles’ buying team to discuss what is working.

“Their participation and involvement in buying and marketing has made a noticeable improvement,” Husain says. “Ideas come from the bottom up rather than top down, and we expect that growth to continue.”

The managers played a key role in another major initiative last year, in which Foyles cleared out thousands of old, slow-moving books to make room for new departments and fresher stock. “We really started to look at the displays and make sure we weren’t overstocking in certain areas,” Husain explains.

Also important has been increased staff training to ensure customers can be directed to the books they want. Foyle, who became a published author himself last summer, notes that, when he toured with his book, Foyle’s Philavery, the quality of staff in rival shops made quite a difference.

“I was just observing how the atmosphere was in all those different shops and how switched on to the customers they were,” he says. “It was interesting to see those with a more pro-active approach and those where it was negative, but I’m not going to give you names.”

Beyond the stores, Foyles is examining how it can make its website more efficient and effective. It is considering bringing in a third party to help with distribution, for example. The site now accounts for 10% of sales, and Foyle says a new team is working out how to improve sales without putting strain on the business.

However, Husain says: “We don’t see the internet as a significant income stream. It is more a link to the store, which is an experience. The measure of people who use the site is increasing, but they are not always buyers.”

Another potential route to new relationships with customers is through a tie-up with the Evening Standard—the two parties are tentatively moving towards a book club concept. The Eros Book Club began by offering discounts on certain titles, but is now looking at hosting special events.

Return on events

Once famous for its literary lunches, Foyles still regularly holds events at its instore gallery, as well as author signings and presentations in nearby venues. An institution since the 1930s under the eye of Christina, Foyle says the lunches were fabulous in terms of creating goodwill among the literati, but were a huge drain on resources and were increasingly unable to deliver enough publicity to pay for the “tens of thousands” of pounds they could cost to organise.

“If you are hard-nosed about it, they didn’t warrant having 10 a year,” he says. “Now we only have one or two a year, and to make up for that we have a lot of evening events.” The evening events have been developed as a new institution over the past five years, and Foyles now has a database of 12,000 people interested in attending.

The likes of Jeremy Paxman or Michael Palin can be a huge draw, helping to sell books and raise the profile of Foyles, and, crucially, the events are profitable. Foyles is determined to move on from its chaotic past and be a modern, sustainable business.

The company increased sales by 25% to £18m in the year to June 2007, and expects to reach £22m this year. The following year it is targeting £30m as the new stores contribute and the quality of sales improve. Foyle says: “At the moment, touch wood, things are good, but there is a big question about what happens in the market. If there is a big economic downturn, we would get affected.”

Despite his ambitions, he says the next few years will be a period of consolidation as the firm makes the most of its new stores. “We don’t want to go out on a limb. We want to become profitable properly before spending more money that puts a strain on the mechanism.” That is, of course, unless another tempting opportunity like White City comes his way.

Retail Foyles Flagship Sarah Butler

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