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1
- THE PROTECTION RACKET
To some they are the latest accessory, along with a gold Rolex or S
reg BMW. To others, close protection staff, or bodyguards, are becoming
a corporate necessity. By Rhymer Rigby
Back in June, the president of Chanel decided to visit Italy. Chanel's
security thought that the trip might entail some risk, so they called
in Alberto Gallazzi, an Italian 'close protection specialist' - what
used to be known as a bodyguard. 'She doesn't really like bodyguards,'
says Gallazzi, 'but she doesn't decide. Most of the time these people
don't realise how important they are - but the people behind her at
the company do and they call us. Y'know it scares me - I'm walking in
and she's the president of Chanel.'
Alongside pop stars
and politicians, it is now fairly common to see business top brass accompanied
by executive close protection staff. Their duties range from detecting
bugs to ensuring their charges stay alive. Actually, says Dave Roberts,
president of US based British American Security Consultants, corporate
types are pretty good to work for: 'You can say to the head of a Fortune-500
company "You're not going down that street" and they're fine
about it. Whereas a well-known singer will say "I want a KFC"
and then insist on getting it themselves.'
Business executives
may be preferable to celebrities, but this says little in itself: after
all, Sir Dominic Cadbury rarely has his jacket torn off by screaming
12-year-old girls. More to the point is: do executives need close protection
at all? It depends not only on who they are and what their company is
up to but also where they are. A relatively obscure FTSE-100 chief executive
can stroll around the City all day with impunity.
But wandering through,
say, certain areas of Azerbaijan or Georgia is probably not best done
alone. Equally, if the company is embroiled in some sort of controversy
or the individual enjoys an unusually high profile he or she may want
a little 'company'.
The comparison with those higher-profile groups who are likely to get
shot at, kidnapped or to have less-than-desirable forms of attention
lavished upon them is instructive here. Like celebrities and politicians,
the corporate top brass is wealthy and 'important' (or at least important
enough that someone will pay to prevent extremities arriving in the
post). But unlike celebs and politicians most business executives are
near invisible: everyone can name a few top government officials and
any number of 'entertainment workers'. But ask the average person to
name five business chiefs and they'll be lucky to get beyond Richard
and Anita. Business people are not normally a tabloid mainstay and relative
public indifference makes for a low level of exposure. For those who
are not natural egomaniacs or exhibitionists this can only be a good
thing: 'Anonymity,' says Roberts, 'is always better than the alternative.'
Moreover, anonymity is something that even the most important company
chiefs in the world may enjoy. A little over a year ago Gallazzi was
looking after Panasonic's world and European presidents in Italy. 'For
the Japanese,' he explains, 'it was a big event and for them it was
very important to have someone to follow (the two chief executives),
but I can say that the threat level was very low. Because, for the people
in Italy, they looked like normal Japanese going around taking photos
of monuments.'
Of course, a businessman's
visibility (pace Branson) is largely a function of the media. Michael
Baron, external director of the self-explanatorily named Control Risks
Group makes an allied point: 'If, say, your chief executive has just
made it onto the Sunday Times Rich List and they publish a nice big
photo of him he suddenly develops a higher profile.' Using resources
such as Companies House anyone with a little determination can dig up
a chief executive's address; moreover, among the numerous iffy web sites
there are now those set up by 'single issue groups' that specialise
in publishing the names and addresses of top business folk. In truth,
this kind of attention will often fade soon enough, although former
British Gas boss Cedric Brown may feel that celebrity status lingers
interminably.
Paradoxically, any
security employed is likely to raise the user's profile, though some
people seem to actively welcome this. It is unlikely, for instance,
that Mohamed Al Fayed is wholly oblivious to the attention his 12-strong
entourage attracts. Still, in certain parts of the world businessmen
consider it de rigeur to have a couple of 16-stoners at their sides.
This is particularly apparent in Russia where the reason for it is a
combination of a genuine need (shootings are routine) and the current
gaudy gangster trappings favoured by wealthy Muscovites.
It is also catching
on in the States, where, in some cases, it is just about vulgar ostentation.
As Baron says, 'It can be as much a status symbol as buying a car or
yacht. It's obvious that this highly visible security costs money.'
But, he continues, 'on the other hand, it can buy peace and reassurance
as long as its effective, the people are properly trained and are not
just there because they're very large.' Of course those who adopt this
do make themselves more of a target: 'You can have highly visible security,
but then you're highly visible - you obviously have something that needs
protecting.'
Most respectable
western businessmen and women (if 'at risk') will usually eschew bodyguards
who conform to the popular public stereotypes in favour of rather more
discrete protection. Explains Roberts, 'They look for someone who the
head of the company can introduce as their "executive assistant"
and who will be regarded as such. Your bodyguard needs to be someone
who will blend in the principal's community. Large individuals with
a broken nose and dark glasses are out. You want someone who can articulate
without grunting but if the chips are down will respond accordingly.'
Gallazi agrees: 'In the past it was a big guy - you'd get martial artists,
ex-members of Mossad, the Foreign Legion, whatever. Now it's more brains
than muscle - most of our job is prevention, prevention, prevention.
You don't walk around with a machine gun in your hand.'
Gallazi's CV backs
this up: he was once the Italian kick boxing champion, but he is also
speaks three languages; he's qualified in small arms and edge weapons
- but is also PC literate. So, true to the spirit of the '90s, being
a bodyguard is much more about using intelligence and information to
minimise the risk of an incident happening than being able to react
if one does. Gallazi's duties might involve making several hotel reservations
and choosing one at the very last minute and ensuring that sensitive
information is secure - as well as the more obvious checking for bugs
and bombs and being able to use firearms.
Having said all
this, Britain is a relatively safe country - especially, as Gallazi
points out, 'now they've taken all your weapons away'. Celebrated public
figures like Branson may need a few assistants, as might those whose
companies attract the attention of potentially violent groups like animal
liberationists. However, businessmen and women in general are only really
'at risk' in the sense that any wealthy person is. This goes for the
whole of Western Europe, except southern Italy and Sicily.
Even so, protection
and risk assessment are big business. Dave Abbot, director of Defence
Systems Limited (DSL), says that the real danger spots are Eastern Europe
and the Confederation of Independent States (CIS), where crime is the
principal risk, South America (kidnapping) and Africa (minor wars).
The US, despite
the gun-toting horror stories we hear is really much like Britain, just
more so: there is little danger unless visitors do something naive and
ill-advised like jogging in Central Park after dark. 'You'd be surprised
how many people do that kind of thing,' says Abbot.
That businesses
like DSL prosper attests to the compelling reasons to do business in
genuinely dangerous areas. While a software or rug-making business can
set up almost anywhere, companies in some sectors have little choice:
British Petroleum and Mobil executives do not hang around Azerbaijan's
capital, Baku, because they like the beaches. Oil, gas, diamonds, gold
- unfortunately all these highly desirable extractables are often to
be found beneath countries which are currently staging re-enactments
of age-old conflicts using ground-to-air missiles. Moreover, says, Baron,
'Even if a country's safe the discovery of a huge deposit can raise
old tensions - it's often called "the curse of oil."'
There are also the
emerging markets, particularly in Eastern Europe - places that forward-thinking
companies want and need to be established in. Although compared to Africa
or South America, these are far more like the West, unfamiliar visitors
can often find real trouble. Again, it can vary with sector: a company
looking to muscle in on the Mafia-dominated alcohol and tobacco industries
is likely to run into entrenched opposition.
As Abbot says of
Russia, 'It's not unknown for an ex-patriate to be shot as a warning.
There was an American company a couple of years ago which got into bed
with the wrong people.' Things went very well for over a year with the
company showing (surprisingly given the time scale) a small profit.
This, he adds, should have set alarm bells ringing. Eventually a dubious
invoice was queried, the Americans realised that something was amiss
and shortly afterwards the chairman was murdered as he got out of a
lift. He was replaced by a considerably less conscientious Russian.
'We were then called in to investigate and they were in it up to their
necks. They asked us for help too late, they should have done it before
they moved in.' Shortly after DSL finished its investigation a car bomb
exploded outside one of the company's shops in Azerbaijan and the company
was forced to withdraw from the CIS altogether.
Gallazi is similarly
blunt about the perils for all concerned in Russia: 'I knew two (close
protection) teams who worked for the same man and they both had people
shot - one of the guys last year and one in '95 - they got killed, they
worked for the same association as I do.' He himself has been fortunate:
'I see a lot of violence but thank God never gunfire - I hope I never
do. I was cut a couple of months ago but that's something you are trained
to deal with.' He prefers to avoid firearms but 'sometimes the threat
level is very high and you cannot just work with your hands, though
I try to'.
Peculiarly though,
the biggest single risk in Russia, according to DSL, is traffic accidents.
Locals in oil burning Ladas who see westerners cruising the Muscovite
boulevards in a flashy, western car will sometimes crash into them deliberately
in order to demand money. Russian road rage is quite something: 'You
get people hitting each other with spanners.' DSL provides a 24-hour
call out service for its clients because traffic disputes can be terrifying
for European or American businessmen and their families, the vast majority
of whom do not speak Russian. Abbot recalls one such incident that involved
a local Mafia boss who sustained whiplash - impressively, it was resolved
through the normal insurance channels.
There is also the
question of who to protect: there are easier ways to get at a business
than by, say, kidnapping the chairman. If someone, such as a disgruntled
former employee, is targeting a business, says Baron, 'they may not
be too choosy about who they target. As far as they're concerned, they're
after XYZ plc and incidents further down the chain can cause just as
many problems.' This affected Shell during the Brent Spar debacle.
Here, the chairman
and headquarters may have been subject to demonstrations and public
displeasure but, on the Continent, it was the filling stations that
were petrol bombed. 'What we do,' Baron continues, 'is look at the wider
picture, not just one individual person - put it in their business context
and a social and political context as well. How much security you need
and whether top people need bulletproof cars goes back to the initial
risk assessment.'
Where protection
is definitely required, as with Versace, there will usually be a team
of four or five that works solely for the family and follows all their
movements. The corporate side of things is dealt with by a more conventional
security firm. While the two will liaise, and their remits may occasionally
overlap, they are effectively separate. As Roberts says, those who look
after the family should know everything: 'If one's looking to target
an individual, one looks for the weakest link - wife, kids - they might
even snatch the wife's lhasa apso and send an ear back.' In this country,
such incidents remain rare but, says Baron, executives are nonetheless
targets: 'Bill Gates and the custard pie - there have been a lot of
incidents like that. People hold grudges and powerful people have enemies
- then there's the power junkies. Certain individuals like to see big
companies get into a panic and say "I did that". Mostly these
are just silly, disturbing things, but some top people may feel very
threatened.'
BOX: IS THIS GREEN
AND PLEASANT LAND TURNING INTO CRUEL BRITANNIA?
Most of Britain's
business elite - quite rightly - do not worry too much about violence
on home ground. This is a sensible attitude: despite newspaper horror
stories this country remains a relatively safe place.
That said, there
is no reason for complacency. Wealthy business people make tempting
targets for sophisticated criminal and opportunist bag-snatcher alike.
The main problem
is that robbery, traumatic enough in itself, is increasingly accompanied
by violence. Earlier this year, for example, Sir Patrick Sergeant, a
74-year-old businessman, and his wife were attacked outside their north
London home: not only was her £30,000 engagement ring stolen,
but he sustained a fractured ankle and required plastic surgery.
In a similar vein,
in 1997, a Greek businessman in London was stabbed and relieved of his
£11,000 watch; while RyanAir's Tony Ryan was beaten and robbed
by assailants who had waited for him in his Chelsea home. Indeed, last
year saw a spate of such incidents. Carlton's Michael Green was slashed
across the face at his Mayfair home and jewellery, cash and credit cards
were taken. Lady Weidenfeld, the wife of publishing magnate Weidenfeld,
although not hurt, had £110,000 worth of jewellery stolen on the
doorstep of her Chelsea flat.
Two years ago, also
in Chelsea, Formula One supremo Bernie Ecclestone and his wife were
ambushed by their house and had a £650,000 ring stolen.
Even more distressing
was an attack on Stephen Burke, the head of a City recruitment company,
at his Hertfordshire home. The thieves took £15,000 worth of watches
and threatened the family with abduction and murder.
Finally, last year's
attack on the home of Sir Desmond Pitcher, then the United Utilities
chairman, was perhaps most chilling of all in that it was not financially
motivated. While Pitcher was on holiday, the house was firebombed. A
caller told police. 'All fat cats are terrorist targets.'
The common thread
running through many of these incidents is that they took place at the
victims' homes. Their attackers knew their movements, where they lived,
and that they were worth robbing. This does not mean that every FTSE-350
chief should run out and get a bodyguard, but it does suggest that an
increased awareness of attention to security could substantially reduce
the risk of it happening to them.
BOX: HEINOUS CRIMES
IN FOREIGN CLIMES
Kidnappings are
very rare in this country. This is largely because it is a crime which
requires organisation; and in recent years, the only large-scale UK
criminal organisation has been the IRA, whose members have agreed to
a cease-fire. Elsewhere, things are rather different. On the Continent,
kidnappings are more commonplace. Naturally business people - and their
families - make good targets. Even if they cannot afford hefty ransoms,
their companies may be able to.
Kidnappings so far
this year have included the son of a German businessman (who cannot
be named for legal reasons).
Fortunately, he
was released and the police arrested the kidnappers. Less fortunate
was Giuseppe Soffianti, a 62-year-old Italian businessman who was freed
in February after being kidnapped last year. Before receiving the $2.75
million ransom, his captors withheld his heart medicine and sent part
of his ear to a television station.
In Spain, the duo
who snatched Anabel Segura, a businessman's daughter, from a fashionable
Madrid street in 1993 were also jailed this year, for 39 years apiece.
They had hanged her even before issuing a ransom demand.
Likewise, 1996 saw
quite a few abductions. Italian businessman, Ferruccio Checci was freed
by his Sardinian captors upon the payment of a $4 million ransom. In
Germany the body of abducted multimillionaire Jakub Fiszman was found
in woods outside Frankfurt.
On a more positive
note, Marshall Wais, a 79-year-old American Steel tycoon was kidnapped
in San Francisco. Upon the payment of the $500,000 ransom, he was released
and his abductors considerately gave him $20 to take a cab home. Most
kidnaps do not have such cute endings. If a group is prepared to kidnap
someone, they are quite likely prepared to kill them, too.
2
- Management Lessons from Hollywood - Hire and fire the Godfather way.
Love, trust,
betrayal, revenge ... emotions can run high in the world of business.
Rhymer Rigby kicks off a new series which looks at management Hollywood
style.
The Godfather, widely
hailed as 'the greatest gangster picture made' chronicles the passing
of power from Don Vito Corleone, the head of the New York Mafia (Marlon
Brando) to his son Michael (Al Pacino). Naturally, succession in crime
dynasties is a delicate business and, before Michael establishes himself,
the body count has grown to include his bride, his sister's husband,
several dozen assorted hoods and, through no fault of its own, an unfortunate
horse. In this country at least, it is now considered extremely poor
form to conduct your commercial affairs with a loaded machine gun on
forearm; nonetheless, there is still plenty the British business community
can learn from the infamous Five Families of New York.
The importance of
leadership and unity
'Fredo', says Michael,
'you are my brother and I love you, but don't ever take sides with anyone
against the family again.' Fredo has jeopardised a delicate business
transaction by going beyond his remit. Michael reminds his brother that
he is the chief executive and that public dissent within the boardroom
cannot, and will not, be tolerated under any circumstances.
Effective use of
warnings
Having refused Don
Corleone a favour, Jack Woltz wakes up to find himself in bed with a
horse's head. In the Don's eyes, Woltz is guilty of gross misconduct.
But it is a first offence, so Corleone gives him a written warning.
By severing the head of Woltz's favourite stallion, personalising and
underscoring his message, the Don communicates effectively and demonstrates
good 'people skills'.
Succession management
After the attempt
on his life, Don Vito Corleone decides to retire, passing the torch
to his son, Michael. He continues to give Michael advice that will ultimately
save his life, however. Corleone Sr is keenly aware that the transition
from one CEO to another can be a difficult one and makes himself available
on a consultancy basis until the new boss has found his feet within
the firm.
Key man insurance
Having stormed off
to stomp his sister's abusive husband, Sonny Corleone, the Don's anointed
successor, is cut down in a hail of gunfire. Don Corleone had long realised
that his heir apparent would be a natural target. Although the Don had
always wanted his third son, Michael, to 'go legit', were misfortune
to befall Sonny, Michael would be there to step into his shoes.
Using your mandate
for change
'Today, I settle
all my family business,' announces Michael, before having all those
who have crossed him executed, while he is at a christening. As an incoming
CEO, Michael knows that his first 100 days are important: he is the
'new broom' and any sweeping changes he wishes to make should be made
quickly. Tough decisions now will greatly strengthen his position later.
3
- RETURN OF THE OLD SOFT SHOE
A struggling
shoemaker earmarked for takeover in 1993, the old family firm of Clarks
has been brought smartly up to date by a slick chairman/CEO double act.
Author: RHYMER RIGBY
When he's down with his home boys (gangsta rap crew, the Wu-tang Clan)
Ghost-face Killah is usually bigging it up on the mike - disrespecting
women, badmouthing fellow rappers and telling you about his less-than-convivial
relations with the local police. But when he gets home and kicks back,
he's just a regular guy who likes to slip on a pair of Clarks Wallabees
and relax. That's Clarks as in the shoes that 95% of Britons grew up
in.
What's more, the
nice Mr Killah isn't the shoe company's only unlikely customer. Brit-twit
brothers Noel and Liam are big, big fans of the company's venerable
desert boot; the shoes regularly crop up in the glossy mags like The
Face, Arena and GQ; and if you hang around glitzy London bars and glance
down at the footwear sported by the beautiful people, chances are that
among the Prada trainers and Patrick Cox loafers you'll spot a couple
of pairs of Clarks.
Clearly something
happened to one of Britain's best-known brands when we weren't looking.
Clarks shoes aren't supposed to be cool. And Clarks shops are meant
to be where mums and dads drag unwilling offspring to buy sturdy, sensible
shoes untouched by the vagaries of fashion. And in years gone by Clarks
was all that. But it isn't any more. The shops have lost their '70s
shopping mall decor; the traditional shoes have been bought smartly
up to date and some of the new collections are positively weird.
Even the current
ad campaign, with its 'New shoes' leitmotif, is by uberhip London agency
St Lukes. Oh, and while we're at it, the company's profits have also
changed for the better. In early April, it turned in a third year of
record results, with sales up a respectable 5% to pounds 832 million
(not bad when the shoe market is pretty much a zero-growth area) and
profit improvement of 19% to pounds 50.4 million.
Descendants of the
original Clarks still own about 70% of equity, making AGMs a little
like extended family reunions. Yet this venerable British business has
undergone a management revolution in recent years. To see the whole
story requires a visit to Street, in the shadow of Glastonbury Tor.
This is Clarks' global (more of which later) headquarters and a company
town if ever there was one. Across the road from The Bear (the company
pub) is an imposing, if rather austere, Victorian structure that dominates
Street. And inside work the duo behind the transformation of the business.
These are Roger Peddar, the avuncular, rather traditional-looking chairman,
and Tim Parker, the CEO who, with his jacket, jeans and enormous mop
of curly hair, is the last person you'd expect to find heading up a
British institution.
Peddar's story begins
in 1963, when he joined the company, quickly becoming the chairman's
PA. This, he says, 'is normally a one-year tour of duty, though for
me it became a lifetime's duty, as I wound up marrying his daughter
in 1968.' Shortly afterwards, he left the company, making him a Clark
by marriage but not a Clarks' Clark, an important distinction.
Some 20 years later
he rejoined the business as a non-executive director - having worked
for BHS, Burton, Halfords and Harris Queensway and co-founded Pet City
en route. He was there, he explains, as a 'quasi-outsider', pressed
onto the board by shareholders who were concerned about the company's
lacklustre performance and boardroom wrangles.
Matters came to
a head in early 1993 when the chairman, Walter Dickson, recommended
the shareholders to sell up to Berisford, a former sugar company.
In what was, by
all accounts, a tempestuous meeting, 'the family reasserted itself',
voting overwhelmingly not to sell. Other shareholders, largely institutional,
were in favour.
Unsurprisingly,
Dickson resigned shortly afterwards and the company looked to Peddar.
He became chairman at the end of 1993, and then 'took a year to determine
what needed to be done'. The answer was a lot. And this included appointing
a new, 'fully outside' CEO. His eventual choice of Tim Parker owes much
to luck: reading a business magazine (not this one) on a plane, he came
across an article about Parker, an LBS graduate who had been mixing
it at Kenwood, the kitchen appliances company. 'So I said to my secretary:
'Can I have that article about that curly-headed fellow?' She gave it
to me and I posted it to the head-hunter and said: 'Please can I talk
to this man. I doubt he'll reply.''
Two weeks later
Parker did reply. He'd got the call and, like many of us, remembered
Clarks in the form of 'funny sandals I had as a kid'. But he asked for
some more information and realised that the company was far bigger than
he'd imagined and that it had 'boxed itself into a corner'.
After numerous discussions,
he persuaded himself that it was an exciting opportunity. Besides which,
he adds, he liked shoes, even if he wasn't terribly keen on what his
prospective employers had to offer at the time.
With Parker on board,
the company could set about doing what needed to be done. Clarks' main
problem was that it was manufacturing 70% of its shoes in the UK. This
was in a market that had globalised quickly (for example, the US imports
95% of its shoes) and almost everyone else was manufacturing in low-cost
countries such as Brazil and India. The main reason behind this approach
was the company's traditions. Clarks' founders had been Quakers and,
in the Quaker tradition, treated their workers in a caring, paternalistic
way. The company's shares had largely passed to Clarks' descendants
and the ethos lived on: sacking people en masse was not something Clarks
did.
As a consequence,
it had sought to reduce its costs in other areas: cheaper leathers,
reduced detailing and so on. The result was rather dull yet still expensive
products. Clarks' bottom line was suffering and would continue to do
so as long as it manufactured most of its products in the UK.
'Look,' says Parker,
'nobody likes redundancies and one of the difficulties the company had
was that it had got confused between benevolence and inaction - and
sometimes you use the notion that you are benevolent to avoid taking
hard decisions. But that's destructive in the long term, because the
decisions don't go away.'
This is a point
that Peddar agrees with strongly. 'You're preserving that which has
no future beyond its natural life,' he adds. 'That's not just dangerous,
it's anti-social.' The choice was stark: declare a lot of redundancies
or watch the company slowly die.
So they embarked
on the inevitable, from the top down. Management was cut, a big layer
was taken out, outsiders were brought in and some existing employees
were promoted. To try to make the process understood (if no easier),
Parker made a real effort to explain what he was doing. 'I spent a lot
of time trying to get to know people in the company rather than just
hiding away in my office, issuing edicts. If people meet you and know
you're a flesh-and-blood individual with a family and all those tedious
concerns, it makes it far easier for them - even if they don't agree
with you - to not cast you in the role of some nasty, dangerous outsider.'
He took this process
to impressive lengths. When they lost a quarter of the staff in Street
(about 400 people in what is still a village), he went to a meeting
of the parish council to account for himself. Here he was asked by the
depressed villagers to promise no further redundancies - an assurance
he couldn't give. It was, he says, an experience 'I vividly remember'.
Painful, though
this period was, it wasn't quite as dreadful as it could have been.
Some of the factories weren't shut completely, but they had their workforces
cut and their processes simplified; others were sold as going concerns
(notably to Doc Martens). Some manufacturing workers were moved into
retail or other areas and, in the event, only 9% of its workforce were
actually made redundant. 'We have become a UK retail business,' says
Peddar. 'The nature of the activities has changed but, in terms of headcount,
the attrition hasn't been that great.'
Over to the shops
- of which the company has 550 in the UK - and the company sold the
'non-core' Clarks Village, to MEPC, for which it received pounds 54
million. This was distributed to shareholders, who for years had been
suffering lousy dividends. And then there was the high street refit.
Out went the green-and-white trim (which probably looked pretty swish
back in the late 1970s); this has now been largely replaced with a far
more millennial glass and blonde wood look.
There were also
the shoes, which had become, well, staid. 'Like a rock music business,
we have a back catalogue,' says Parker. Using this as a base, they set
up a business called Clarks Originals, which produces the footwear that
has got the style press into such a lather. It is these that look like
the kind of thing you'd find in ranges by Patrick Cox or Prada; the
only difference is they cost a third as much. 'What we've got now is
a business that isn't just selling shoes to people in their seventies,'
says Peddar. 'It is, but it's also selling surprising numbers of shoes
to young people and has a fair amount of kudos.'
Was all this easier
because the company was private? Not really. 'Most of the big problems
with turnarounds,' explains Parker, 'occur because management creates
unrealistic expectations, especially about how long things will take.'
Indeed, the main difference, adds Peddar, is that you don't get any
hassle from City analysts or the media - 'meaning we can take a medium-term
perspective.'
From a British perspective,
one of the most surprising things about Clarks is its enormous global
presence. It is, in fact, the number one 'brown shoes' brand in the
world. (For those unfamiliar with shoespeak, black shoes are formal,
white shoes are trainers and brown shoes occupy the casual ground between
the two - docksiders, loafers and so on.)
Actually, Clarks'
international operations go back a long way. Its shoes travelled with
the Empire and (unlike the Empire) stayed. Which is why the company
has as real brand presence from Bermuda to Papua New Guinea.
It's also big in
Japan, where teenagers and twentysomethings have taken the Originals
to their hearts, to the tune of half a million pairs a year.
And the other great
market is the US, where, with the Clarks and the Bostonian brands, it
generates about pounds 200 million in sales and about a quarter of its
profits. 'In the last five years,' says Peddar, 'we've gone from UK
exporter to branded international retailer.'
So, worldwide activities
then, but, thus far, no mention of the world wide web, at a time when
most businesses are shouting their net presence from the rooftops. Well,
Clarks does have a web site, but it's in no great hurry to sell shoes
electronically.
'We were at a conference
in America recently where they suggested Tim was a Neanderthal and I
was a Luddite, because we hadn't 'got religion'.
But there's one
big barrier for us - it's called fit,' laughs Peddar.
The problem, you
see, is that although white shoes have a wide fit tolerance (usually
about two sizes), meaning that a size eight trainer wearer can get away
with anything from a seven to a nine, the tolerance for brown shoes
is half a size, meaning you really need to try the things on. That said,
adds Parker, 'we will be selling shoes on the internet early next year
and we will be collaborating with people who sell on-line, but I have
no desire to tell people I'm spending pounds 10 million of the company's
profits on the web. That's an advantage of being private - I don't need
to protect my backside against acquisition by chivvying up the price.'
Some e-presence
aside, what else does the future hold? The downside is that shoes are
pretty much a zero-growth market.
As Parker says:
'Every extra shoe we sell is at the expense of someone else.' More positively,
the market remains very, very fragmented, with vast scope for acquisition
in almost every country that Clarks operates in. Flotation? The possibility
seems to have receded at the moment, though will doubtless raise its
head again at some point. Diversification? The company already does
a nice line in handbags and enjoys the distinction of being the world's
largest seller of shoe-care products.
But to be honest,
says Peddar, it has only one real goal: 'We want to be known as the
international casual shoe company. Why muck about.'
1825: Cyrus Clark
establishes his own business in the sheepskin rug trade at Street, Somerset
1828: James Clark
is apprenticed to his brother Cyrus. James uses reject rugs and off-cuts
to make slippers called Brown Peters
1833: James becomes
a full partner in the business. In addition to the slippers, socks,
boots and welted shoes now account for a third of sales
1849: The first
company poster is introduced showing Cyrus Clark's house and the front
of the factory
1851: Two prizes
at Prince Albert's Great Exhibition at Crystal Palace turn around dwindling
sales and save Clarks from almost certain bankruptcy.
1863: Second threat
of bankruptcy. William Stephens Clark is put in charge and is 'very
soon able to alter much that had gone wrong'
1866: Cyrus Clark
dies
1870 Sheepskin business
transferred to Clark, Son & Morland at Northover, Glastonbury
1872: A new partnership
is formed between James Clark and William Stephens Clark
1880: 'Torbrand'
shoes launched
1883: William buys
a cider house opposite the factory and turns it into a coffee house
to dissuade workers from drinking
1893: Hygienic Boots
and Shoes launched. Coffee house demolished; Bear Inn established
1903: London showroom
opens on Shaftsbury Ave
1908: Clarks becomes
a limited-liability company
1910: First 'in-stock'
system: shoes dispatched from the warehouse on receipt of order
1913: Most of Street
depends on C&J Clark
1920: 'Torbrand'
becomes 'Clarks'
1925: Clarks lab
opened
1927: 'Wessex' range
of shoes launched
1934: First press
ads
1937: Clarks starts
shoe retailing using the name Peter Lord
1938: Roger Clark
becomes chairman.
1940 Clarks contributes
to the war effort by making aircraft components and torpedo parts
1942 W Bancroft
Clark succeeds his father Roger as chairman and leads major expansion
1950 Desert Boot
introduced by Nathan Ckark
1952 Clarks brand
first appears on shops
1967 W Bancroft
Clark retires
1975 Clarks celebrates
150 years
1980 Clarks takes
over the 'K' brand
1985 'K' launches
Springers range of women's comfort sandals
1993 Shareholders
reject Berisford bid; chairman Walter Dickson resigns. Roger Peddar
becomes chairman
1996 Tim Parker
joins as CEO and starts restructuring and moving production overseas
2000 Clarks celebrates
175th anniversary and third consecutive year of record results.
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