Speaker John Hinchcliffe the CEO of Freemans - Grattan

The History of Freeman Grattan Holdings (FGH)
John said that Grattan started in 1912 on Grattan Road in Bradford whilst Freemans started in 1905 on Lavender Road London. The combined business has a turnover of £250 million. 80% of their orders are online with their web sites receiving 2 million hits per week and they no longer have any agents. They have around 700 employees in Bradford at either the head office in Little Germany or at the warehouse. In addition, there is a call centre in Sheffield that contains another 300 people. In 1991 Grattan was acquired by the German company Otto who also acquired Freemans in 1995. In 2000 the two business were merged. The combined business of FGH trades through lots of other brands as well as the parent names – Kaleidoscope, Lookagain.co.uk, bonprix, Curvissa, WITT international, Swimwear365, Clearance 365, LASCANA and Gifts365. All these brands are aimed at women and are advertised mainly on daytime TV. The average customer age is 50 so they are not competing with the fast throw away fashion market that is dominated by the likes of ASOS and boohoo.

John’s Background
He then gave some details of his own background. Born and brought up in Keighley he described himself as a nerdy boy who only achieved modest A level results which didn’t get him into university. This set him on a path of doing things the hard way. He now has two degrees – a degree in Social Studies from Bradford University and an MBA in Business Studies from Bradford Management Centre. He started his career at Damart before moving to the JDA Group and then in 1994 to Grattan as a marketing manager. For the last 20 years he has been a director of what used to be termed Catalogue Companies. Originally as Marketing Director at FGH but he left them in the 2003 to join J D Williams in Manchester as their Marketing Director. He was then persuaded to return to FGH in 2012 as CEO. He described his business style as hardworking, paranoid but honest. If things go wrong in his business, then it is his fault and he tries to only hire people who have a similar outlook.

The Current Status of the Fashion Industry
He believes that in the 1990’s retail fashion businesses became complacent. Companies such as Asda started selling jeans for £5 a pair whilst his business was selling them for £20 on credit terms at £5 per month. With the advent of Primark, smart phones and social media the situation only got worse. Now a company must either sell at the market price or drop that product from its range. FGH now approaches its market with high service levels such as next day delivery. The business has a high amount of variable costs but lower fixed costs as it doesn’t have lots of stores like the high street retailers. Over recent years there has been deflation in tht fashion industry of 7% p.a. as customers have moved from the likes of Marks & Spencer and Debenhams to Primark and Asda. The management conundrum for FGH is the need to work very flexibly whist also following the rigor required by the Financial Conduct Authority since the company is a regulated Consumer Credit provider.

Politics
John believes we over state our importance on the world stage. We have lived too long on past glories, but history does not pay today’s wages. On Brexit he believes we are trying to stand alone for all the wrong reasons and as such he was very much a Remainer in the referendum. However, he says we are now where we are and have no option but to leave the EU which we should do on the best terms possible so that we maintain frictionless trade with the other countries. He says we have many advantages as English is the language of business, we are central in the Commonwealth and are a relatively big economy in Europe. He feels that today’s politicians have completely messed up the situation. From what he believes were the lies of the Leave campaign to the current times where we have failed to negotiate properly our exit terms and then gone on to the inept squabbling of all sides in Parliament. He is strongly opposed to a second referendum which would be a cop out of the politicians throwing the decision back into the people’s hands. He said there is no way back and we now need to make the best of our future relationship with the EU.

Brexit issues for FGH
These are numerous from foreign staff employed by the business who they are helping to gain settled status to cost price increases because of sterling’s devaluation. There are also issues with data transfers between the UK and it’s parent company in Germany. Also stocking of items for sale in a fast-moving environment. The Company has a Long Tail of thousands of items on its web site so it cannot afford to stock them all. Instead a portion of them are items stocked by sister companies within the Otto group and when one of these items is ordered by a customer it is shipped from Germany. Without a trade deal this would involve a tariff into the EU from say a Far Eastern manufacturer and then a second tariff into the UK putting up the cost to FGH by around 12%.