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On the shop floor with...TJ Morris operations director Joe Morris
Archived article dated Monday June 29th 2009
TJ Morris is a good example of how the media industry is heavily biased to the south of the country as it is likely that many people in the retail industry will have very little knowledge, if any, of the company's Home Bargains discounter chain.
With £382 million of annual sales to end-June, derived from its 170 stores located mainly in its heartland of North West England, it is difficult to imagine the business having quite so low a profile if its headquarters and shops were based in the South East of the country.However, having a profile lower than a snake's belly does not concern Joe Morris, operations director at TJ Morris, who is one of the four brothers running the rapidly growing family-owned retail empire. I suspect he'd rather be just getting on with the job of growing the business rather than spouting off about it.
Raising the profile of the company through advertising, promotion and PR would also come at great cost and would therefore go very much against the TJ Morris ethos of cost-control at all costs. This is at the heart of the company and is what has enabled it to gain scale. But its low levels of exposure could be about to change as Morris says expansion is on the cards, which will take it further south than its current southern-most shops in Milton Keynes and South Wales. This growth is made possible by the £35 million investment it has recently made in a new distribution depot in its home city of Liverpool.
“We've grown 25 per cent each year for the last 10 years and are continuing that growth. It is all down to finding the stores and being able to support them,” he says, safe in the knowledge that the recession is throwing up ever more opportunities for new stores and that the depot will provide the necessary support for them.
Morris reckons the new depot will enable the company to move towards running 350 outlets, thereby edging closer to its ultimate target, which is to operate between 500 and 600 stores throughout the UK.
Although this will involve Home Bargains shops opening up in new territories it does not worry Morris (I get the impression little does): “The further we go from the homeland the better the reception
One way the company converts people into new loyal shoppers is to deliver a high quality shop-fit that differentiates it from other value-focused retailers. “We invest heavily in our stores with each new one having a £500,000 fit-out. For 10,000 sq ft stores that is a big investment,” he explains.
At the discount-end of the market new stores often open up in a mere two weeks following purchase of the site, whereas at TJ Morris it can take three to four months. “We don't just put up a new sign,” he says.
A decent store-fit is clearly only a very small part of what drives success at the business. The key thing, as shown by the company's strap-line, is selling 'Top brands at bottom prices'. Unlike many other discount operators Home Bargains focuses mainly on well-known branded goods rather than offering own label products and obscure brands.
Its range has grown from solely health and beauty products to encompass household goods, food, toys, home wares and clothing. Morris describes it as “wide but shallow” with products selected for being “uncomplicated”. There are therefore no fresh and frozen foods, and no types of alcohol that are deemed a “hassle” because they need locking-up or require special display cabinets.
This all helps to strip-out costs, which is absolutely crucial to the Home Bargains model. “The whole business is about selling products cheaper than Asda, Tesco and any other competitors. But since we can't buy cheaper than them then we have to keep our costs under control,” he says.
To this end its back-office systems have been developed in-house with the group running its own bespoke Electronic Point of Sale solution, warehouse management systems, and buying software. It also uses its own vans and distribution network.
Nothing is outsourced to third-parties as this might increase costs and eat into margins, thereby reducing profitability. While there might be “massive margins” to be had at the high-fashion end of the market Morris says that at the dirty/lean/mean end of the value chain you simply have to control your costs in order to maintain sales and protect profits.
Another key contributor to the model is opportune buying with 30 per cent of the range continually changing. The company is therefore always on the lookout for clearance stock and fortunately for the company Morris says manufacturers are always “pushing products” such as goods with impending sell-by-dates, old packaging, and cancelled orders from the major grocers.
This constant influx of new products causes its own problems as it is difficult to manage, with no time for jazzy things like planograms, but Morris says the upside is the excitement it creates in-store.
This bit of complexity aside, simplicity is the main aim, as this keeps operational costs to a minimum. This is why the product range is limited to a mere 4,000 lines, compared with more like 60,000 in Tesco, which leads Morris to ask rhetorically: “How much more complicated is it for them, with distribution, shelf space, stock taking, and managing it all?”
He says it is no surprise that the store group he regards as the most efficient retailer in the world is Aldi, which sells a mere 1,500 lines. “What you have to offer is good choice but customers can't always get the flavour of toothpaste or the type of shampoo that they want,” he says.
Morris acknowledges that this means Home Bargains does not suit everybody and it is also not a place you can do your weekly shop. But it does appeal to people with time on their hands who are looking for bargains and this group of time-rich, cash-poor individuals is certainly growing mid-recession.
glynnd@theretailbulletin.com
Tagged as: tj morris | glynn davis |
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