The founder of British fashion and homeware retailer Matalan, John Hargreaves, stepped down as CEO in 1996. Matalan’s reins fell at long last back into the hands of the Hargreaves family in 2013 when Jason Hargreaves, John’s son, stepped into the CEO role after more than 30 years with the company. Now standing where his father once stood, Jason retains many of the crucial lessons imparted by the elder Hargreaves.
“The lesson really is how to approach people, how to deal with your suppliers and how to treat your colleagues,” says Jason. “You know, treat people as you like to be treated yourself. We’re in the value sector, so we are tough on price, but another lesson has always been, ‘be firm but fair’. When you’re in negotiations, everybody has to leave the table feeling like they’ve won something. Nobody likes to leave the room empty-handed.”
This idea of mutual benefit is a running theme in the advice Jason has received from his father, particularly regarding the company’s relationship with suppliers. “We need our suppliers just as much as they need us,” says Jason. “We’ve always worked very much in a partnership mode with our suppliers.”
“We’ve always worked very much in a partnership mode with our suppliers.”
It’s no surprise that Jason puts so much stock in his father’s words of wisdom. After all, their relationship goes beyond the typical father–son dynamic, seeing as John led Matalan since founding the company in 1985. In a sense, Matalan has therefore benefited from a consistent set of ideals and values for more than three decades, thanks to the Hargreaves family always having had a hand in its management (Jason’s brother and sister have also made their mark on the company, either internally or from external positions in the industry).
It’s this continuous vision that has helped Matalan offer high-quality apparel and homewares at a lower price, within the value segment of the market. This unique position has left the retailer with a revenue of more than £1 billion, and it recently posted an increase in both sales and profits despite market unpredictability in the face of Brexit. In fact, Matalan has outperformed the market so far, even with 2018 shaping up to be a painful year for retailers.
Buoyed by this success, Matalan has expanded overseas in recent years, including to the Middle East, with its most recent expansion being to Malta and Gibraltar. The retailer will be increasing its presence throughout the Middle East in the near future.
Closer to home, the company is diversifying its offerings in the UK, experimenting with different kinds of stores in addition to the existing 227 stores. “We are now looking to open smaller-format stores, for example, urban stores on the edge of town,” says Jason.
Accompanying this is a refurbishment of most of Matalan’s old stores. The company is around a third of the way through the process, gradually bringing the whole chain up to date. Additionally, Matalan has brought its head office and distribution centre into the same location, to improve the efficiency of their operation.
Firing on all channels
Another change – perhaps the most significant – is Matalan’s transition to being a multichannel retailer. While the company has traditionally focused on its bricks-and0mortar presence, the past few years have seen a greater transition to online retail, and Jason is keen to take advantage of this. “We want to grow our multichannel customer,” he says. “That’s the big one, because the customer who shops in both channels spends up to five times as much and is more regular. We want to become the most trusted multichannel retailer of family value.”
A recent survey from digital marketing agency Adtaxi found that a clear majority of shoppers made an online purchase at least once a month, while Amazon and its competitors continue to expand at an impressive rate. Ecommerce dominates the global retail industry, and Matalan is not letting the opportunity slip. In fact, the retailer is well-positioned to make the most of this industry evolution, thanks to one of its greatest strengths – its customer membership system, which exists in the form of a card-based rewards program.
“We’re not the cheapest; we compete with the supermarkets on entry price, but we’re 40–50% cheaper than the mid-market competitors for similar products,” Jason says. “This is how we’re different. We have 12 million active customers, and therefore we have a very loyal customer base. We can target our customers with digital mail. More than 90% of our customers use the Matalan card.”
“We have 12 million registered customers, and therefore we have a very loyal customer base.”
As a result, Matalan is able to move easily into online and multichannel retail, by utilising a pre-existing customer database for its digital communications. Whereas previously the retailer would send 10 or so paper communiqués each year to its members, this has been scaled back considerably, with greater investment in digital channels instead. The company is therefore building an online retail presence as strong as its bricks-and-mortar stores.
That said, Jason acknowledges that the evolving nature of retail can make things complicated. “Just the scale of online growth means we need to have a strategy,” he says. “In the UK, it’s quite different. Each of the supermarkets has a £1 billion-plus general merchandise business, and they have huge footfall, so you’ve got challenges from both online and the supermarkets. And Sainsbury’s and Asda are in the process of joining up.”
Another issue with online retail is that it requires new skill sets and training. “In this multichannel world, the landscape’s changing very quickly, so I have to rely on other people’s skills,” Jason says. “I know my strengths, and I’ll bring people to fill the gaps where I’m not so strong. But I’m very clear and honest. It’s okay to make mistakes, as long as we learn from them.”
Whatever challenges the retailer may face on the digital front, the elephant in the room is undoubtedly Brexit. As the island nation continues to deliberate on the nature of its departure from the EU, the British economy has faced poor growth. Rising interest rates and oil prices, as well as the threat of trade wars, haven’t done much to help either. In June, the British Chambers of Commerce cut its 2018 growth forecast to levels not seen since the GFC. Matalan is, however, not planning on sitting around during this disruption.
“There’s a lot of uncertainty around Brexit,” says Jason. “Everything is a big ‘what if?’ because we don’t really know what will happen, but we’re trying to plan around what we don’t know. The first thing that comes to mind is we have quite a lot of European workers working for us, so we have to make them feel comfortable, by being very open. Another challenge presented by Brexit is the creation of a lot of currency pressure, because of course we buy in dollars.”
A strong footing
Despite the road humps, Jason still takes pride in Matalan’s strengths, and its unique position as a good-value, good-quality retailer. Its customer base is comprised of 30- to 60-year-olds and is predominantly female, giving Matalan a broad appeal to consumers. Jason therefore sees his mission as the provision of value for the whole family, and hopes to leverage the company’s exclusive advantages to achieve this goal.
“We’re in a unique space because we’re a private retailer of over £1 billion with men’s, ladies’, kids’ and home textiles all under one roof, with free car parks,” he says. “Obviously, we hope to increase our sales and profits; that’s the headline. We use our space as an advantage. We try to make it easy and convenient for the customer, and create value in every moment.”
“We try to make it easy and convenient for the customer, and create value in every moment.”
Matalan’s services to British families have been recognised numerous times, most notably by the influential parenting site and forum Mumsnet, which presented the company with the prestigious Gold Award at the Mumsnet Family Friendly Awards four years running. Mumsnet also gave the company the Family Friendly Innovation Award in 2017, for the childcare facilities provided in-store. Matalan has also worked alongside Mumsnet for the Let Girls Be Girls campaign, ensuring girls’ clothes are designed appropriately for their age range.
Outside the apparel and homeware services offered, Matalan is ensuring it contributes to the betterment of families and society in other ways. With only 3% of household batteries being recycled, Matalan offers battery recycling bins, to reduce the incidence of toxic chemicals and metals ending up in landfill. And the retailer constantly looks to improve its own energy, waste and sustainability standards. In store, reusable carrier bags are offered to reduce the intrusion of disposable plastic bags into the environment.
This commitment to ethical practices extends to Matalan’s supply chain. The retailer carefully monitors the garment factories that provide its wares, and suppliers are required to comply with Matalan’s ethical sourcing policies. This includes ensuring suppliers maintain high standards of timber use and animal welfare, such as banning fur, for example.
“I’m very pleased with the supply base,” says Jason. “It’s ethically sound and to a high standard. We still have the best offer out there for our customers, with as much value as possible in a safe environment. I’m a proud guy. I’ve got high standards; it’s always crucial to have the best quality and value and never cut corners. Our factory standards are very high.”
That said, Matalan’s relationship with its suppliers is not one-sided; it doesn’t simply expect them to follow its policies without offering anything in return. As mentioned, Jason believes in the importance of mutual benefit in business relationships. Its suppliers – companies like the Jolanka Group, Poeticgem and Knit Textiles – enjoy at least as much of an economic boost from Matalan’s partnership as Matalan does from them.
“We’ve always been very transparent,” says Jason. “On average, we used to grow about 10% a year with them, so they knew we were a good match. And we’re very loyal to each other. We’d never run around just to save 10 cents. We still give our suppliers a chance, and we’ve been very clear about our growth, what we need to do and how we need to move the ranges on.”
It’s particularly important for Matalan to nurture its partnerships, given that many of those partners have been attached to the retailer for 20 years or more. Not only this, but some of these partners are second-generation businesses, like Matalan itself, a sign that these companies are truly on an equal footing.
“We have a unique and loyal supply base,” says Jason. “Matalan’s very straight. I’m from a sourcing background. I understand manufacturing. I understand how it works in every single country, so I know to maximise the supply base to get efficiency and best product. And we’re consistent.”
“I know to maximise the supply base to get efficiency and best product.”
Culture and communication
Despite its size, Matalan benefits from the ability to easily and nimbly navigate the market. “We’re a private company,” says Jason. “We don’t have many levels of hierarchy, so we make quick decisions based on good information. We are decisive; we might make some mistakes, but we’re flexible as well.”
This decisiveness has caused Jason some regrets over the years, but ultimately it defines the way he does business. “I had a chance to invest in a very big global fashion company once,” he says, “but I didn’t. These things happen, and there are a few regrets. I’d probably say we’ve acquired some companies over time without going through the correct financial route. I’m more of a gut feeling person, so I sometimes make decisions based on those feelings, rather than the financials.”
The flexibility and the less-formal, less-hierarchical structure of Matalan lets Jason grant his team more autonomy. As he described, he’s aware of his strengths, and conversely, knows which areas he lacks expertise in. To fill those blind spots, he grants his team a great deal of freedom to ensure Matalan excels in every department.
“I made it very clear with my team that they’re the bosses of their area, whether it be HR, retail, IT or finance,” he says. “I know what my strengths are; they’re around product sourcing and supply chains. I’m a good trader, so I very much empower them to take care of their own areas. I make the big decisions, but I’ve got a very good understanding of what works for Matalan and what doesn’t.”
Jason also cares about the wellbeing of the people who work for him. The internal culture is therefore particularly important and he strives to ensure the retailer encourages and supports a motivated workforce. To this end, he maintains an open-door policy, and remains visible and accessible in the office. As a result, his team finds it easy
to talk to him, whatever the reason.
Jason is a realist in that he defines success by sales and profit, but at the same time, Matalan’s culture is just as important to him. Jason’s advice for a strong corporate culture is, quite simply, to “be the best”. “You’ve got to have passion; you’ve got to want to get it right,” he says. “It’s important to have a feel-good factor and good momentum in the business. I care. I genuinely want to get it right. Keep it simple. Don’t complicate it. Have a loyal team. Learn from your mistakes, and then be decisive.”
“You’ve got to have passion; you’ve got to want to get it right.”
It’s appropriate that Jason builds an open, communicative, almost-familial culture; in a way, Jason’s career has been defined by family. Matalan was, after all, built by the Hargreaves family, and that family has sustained its growth over the years. So while Jason is driven partially by the mission to “give the customer more, never less”, another source of motivation for Matalan’s CEO is his family. While he acknowledges that he’s put work before his family now and then, his ultimate motivation is to provide for his family, which he does by building on the work his father started.