Kindness is good for business says shoe boss
( cobblers) and he insists that really isn’t
FOR someone who warns of a ‘perfect storm’ in retailing, John Timpson seems remarkably unfazed: perhaps because his Timpson Group, now opening in China after generations on British high streets, has just posted record profits and paid him a handsome dividend.
The group, founded by his greatgrandfather in 1865 and which is 100 per cent family-owned, has just revealed profits of £20 million on sales of £205 million – both records for the company – and a £12.1 million dividend.
However, last year’s 33 per cent jump in pre-tax profits is unlikely to be repeated this year, he warns. ‘I will be surprised if we are able to increase profits during the coming year,’ he says.
A combination of a lower pound and a big increase in payroll costs due to the apprentice levy – which he calls a ‘travesty’ that is set to cost him £400,000 a year – changes to holiday pay calculations and the national living wage are all combining to increase costs for retailers, particularly one which places such a huge emphasis on its staff, or ‘colleagues’ as does Timpson.
‘The materials we use are a small percent of the business,’ says Timpson, ‘but a large slice of the cost of what we do is the people. I’ve always said that if we have great people, we have a good business.’
Aside from rising costs, the future is looking bright. The group has expanded beyond its original shoerepair and key-cutting shops. Now there are 1,850 outlets offering dry cleaning, photo processing, engraving and watch and phone repairs. Timpson’s opened its first shop in China earlier this year, has acquired the Morrisons and Johnson Cleaners dry-cleaning businesses and even boasts the world’s first ‘identity shop’ (of which more later). So what’s his secret? ‘Most businesses do the complete opposite of what we do,’ says Timpson. ‘We’re not a typical retailer, thank God. In every business we’ve ever bought – and people think we’re crazy – we’ve ripped out the electronic point of sale tills and thrown them away, leaving just an adding machine and a cash drawer. Anything more is just a waste of time. Those tills take the freedom away from the shops to do what they want. I don’t want head office to run the business but the people in the shops.
‘We have only two rules – that our people look the part and put money in the till. Other than that they can do whatever they think is right for the business. We don’t do market research, we don’t have a marketing department, we don’t employ a PR company.’
What Timpson Group does have is 3,774 ‘colleagues’ who benefit from having a day off on their birthdays, weekly bonuses and free use of the company holiday cottages. Timpson recently took 150 of them on holiday to Malta to celebrate the company’s 150th birthday – ‘It was sheer enjoyment,’ he recalls. Four years ago he set up his Dreams Come True initiative, which treats staff to anything from IVF, dental treatment, stair-lifts, trips abroad to see long-lost relatives and even a wedding in Las Vegas.
‘We’re going to spend more than £100,000 on Dreams Come True this year,’ says Timpson. ‘It’s absolutely fantastic and really makes a huge difference to people. People don’t realise that business leaders have an opportunity to influence other people’s lives for good or bad more than anyone else.
‘I’ve discovered that the right way to run a business is through kindness – if you’re good to people then it’s good for business.’
Timpson Group has been at the forefront of working with offenders for years now, running workshops in prisons and employing people when they come out of prison – ex-offenders make up 10 per cent of the workforce. Timpson’s son James not only looks after the day-to-day running of the group, but is also the chairman of the Prison Reform Trust. ‘It’s in our DNA,’ says Timpson.
A big driver of company growth is Timpson’s tie-ups with supermarket chains such as Tesco, Sainsbury’s, Morrisons, Waitrose and Asda, where it has pop-up shops or even pods in car parks. Photo processing, including its Max Spielmann business, is the biggest part of the group – it also has the Snappy Snaps franchise – and the passport photo business is booming. This led to Timpson’s experimental foray into ‘digital identity’, opening the world’ s first ID shop, called ArkHive, in Henley.
‘A substantial part of our business is in passport photos and we want to protect that business in the future,’ explains Timpson. ‘ One thing that we can bring to the party is that we can prove that you are you, because we meet you. So it’s face-to-face identity-proofing.’
Visitors to the ArkHive shop can open an account where they can store scanned and verified versions of their driving licence, passport and other documents as well as carrying out employee screening services, passport application and background checks on tenants.
The plan is to enable customers to use the information to carry out transactions online, such as proving identities to open a new bank account, for example.
His new venture, though, is set against a difficult backdrop: retail’ s‘ perfect storm ’. Timpson says that the combination of the recent overhaul of business rates, the introduction of the living wage, rising salaries and changes to holiday pay add up to 5 per cent on the cost of employing staff. But Timpson is confident he can manage. The currency swings won’t have much of an impact on a business that does not depend on imports and the controversial changes to business rates are actually going to lower his bill. ‘We’re going to be slightly better off, which means we’ve been paying too much for the last five years,’ he says.
Timpson, who declines to say how he voted in the referendum, is equally unfazed by Brexit.
‘I think things will be fine – if we look back in 20 years’ time it won’t be seen as a particularly big deal. But I think there’s a danger that we’re going to fail to take the opportunities which are there.
‘It’ s a great opportunity for business leaders to disagree with the advice they get from lawyers and accountants and insurance companies and to do things that are right.
‘Whether people take advantage of it or not is another matter but we’re in a much stronger position now than people in Europe – they’re the ones who have the problem from our leaving. And I can’t see the ability of good people coming to work here will be changed.’ Timpson is in his 70s but is showing no sign of slowing down. He’s just written his ninth business book, Keys To Success, visited 500 of his shops in the past six months, is currently researching the history of the business and is also spending time helping schools deal with ‘ lookedafter children’. Timpson and his late wife Alex fostered 90 children and had five children of their own, of which two were adopted, and the subject is very close to his heart.
He’s setting up the Alex Timpson Trust to help children and families and is currently funding research ‘to make sure that what we’re doing is the right thing’.
His son, Tory MP Edward Timpson, was appointed Minister for Vulnerable Children and Families last year. Alex was a keen racing fan and Timpson still has eight racehorses, one of which ran last week at Haydock.
Last month, Timpson was awarded an Outstanding Contribution to Retail award. ‘I got the old bugger’s award this year,’ he says, ‘which was nice for a little cobbler who does things a bit differently.’
We have only two rules – that our people look the part and that they put money in the till We’ll look back in 20 years’ time and Brexit won’t be seen as a big deal – things will be fine