Concessions could be the key part of upmarket homewares and furnishings retailer OKA’s growth in the years ahead as it embarks on a fresh strategy with a new look board.
The business, which was co-founded by Prime Minister David Cameron’s mother-in-law Lady Annabel Astor, last month appointed Lori Rosenfield as Retail Director and opened its first concession, in London’s Selfridges, laying the foundation stones for a new commercial path 12 years on from its birth in an Oxfordshire barn.
Chairman Graham Frost argues that now is the correct time for the 14-store and mail order business, which generated EBITDA of £472,487 in 2010, to re-evaluate and reform.
“As leases expire on a number of our current sites we are taking the opportunity to consolidate but also to look for new opportunities,” he told Retail Gazette.
“The idea is to replace what we have with new larger stores, but with the Selfridges concession we will be able to see if this is another route to the marketplace.”
In appointing Rosenfield to the board, where she joins directors of marketing, operations and finance, as well as co-founders Lady Astor, Sue Jones and Lucinda Waterhouse, OKA has highlighted its intentions to develop the retail side of a business that began as a mail order firm in 1999.
The new recruit has joined from homeware and accessories brand Cath Kidston, where as Head of Retail she helped the business grow from three stores to just under 50 outlets in the space of seven years.
Cath Kidston has also achieved a great deal of success through its plethora of concessions across the UK and, with that in mind, it is unlikely that the OKA Selfridges tie-up will be the last time it trades on another retailer’s premises.
“Rosenfield will look after the showroom standards and staffing, and will be looking at opportunities to open new stores and concessions,” states Frost, who has in the past held senior roles at high street retailer Next, home shopping specialists Grattan and female fashion specialist Monsoon.
“She has got a great track record and we think that now is the time, as we restructure our property portfolio, to bring in someone as professional as Lori.”
The revamping of the OKA store network will see the 14 stores it currently runs reduced to eight by this time next year, but Frost suggests that the optimum number of outlets by the end of 2012 will be around 11.
In the same way that its Sloane Avenue store in west London was closed last year and replaced with a new 14,000 sq ft site in nearby Chelsea, OKA will be looking to close down some of its smaller shops and eventually unveil stores in the larger format.
“14,000 sq ft is a wonderful size, allowing customers to see what goes with what,” Frost asserts.
“The store in Chelsea operates over three floors and is able to showcase everything we sell.”
Although the company, which generated sales of just under £15 million last year, is reportedly reaping the benefits of its new London flagship branch, the huge investment in its opening did hit profits.
The Chairman calls the opening “exceptionally expensive” and criticises the actions of some landlords in the London property market.
“The London property scene is really expensive, with properties only on the market for a few days,” he notes.
“Landlords do not seem to be reducing rent prices and are asking for substantial premiums.”
Frost explains that there is no concerted attempt to get out of London, but OKA is planning on scaling back the number of stores is operates in the city from five to either two or three in order to avoid “cannibalisation” of its shops.
He indicates that OKA is looking for locations where they do not yet have a physical presence such as the south coast around Bournemouth, as well as Cheshire’s ‘Golden Triangle’ incorporating Alderley Edge, Prestbury and Wilmslow.
Considering it already has stores in places such as Notting Hill in west London and Harrogate in north Yorkshire, as well as some other exclusive parts of London, this list of target destinations shows that the company is clearly targeting the high-end shopping demographic.
Catering for second property owners, the cash rich but time poor and those redeveloping their homes – essentially a comfortable middle class market – and backed by such aristocracy, it begs the question whether OKA needs to worry about the downturn in consumer spending at all.
“I don’t think any business in the UK is recession proof – every firm is going to find life quite difficult at the moment,” Frost said.
“You survive by offering the right product at the right price – and you have to continually innovate.”
OKA intends to do this by continually refreshing its range of products and by looking to open stores in unusual locations, for instance it operates from a 14-room Georgian house in Worcestershire allowing the retailer to display items as they would appear in shoppers’ homes and gardens.
In terms of the shopping experience, the business aims to put a greater number of home experts on the shop floor to provide more of a personalised customer service and invest further in its interior design team, who will be responsible for undertaking internal property renovations on an international scale.
“We need the right staff in the right place,” Frost comments.
“In retail it is all about how you engage with the customer when they walk in the door and how you get them to make a purchase – Lori will be helping with this side of things.”
It would be somewhat ironic if a retailer that takes pride in improving people’s properties did not have its own house in order, but as the recent sales figures show this does not appear to be the case.
OKA only employees around 100 staff though and is a small retailer in comparison to many other homewares traders in the UK, but with its focus on innovation and customer engagement it is doing all the right things to ensure it can sell furniture in a sector going through one of its biggest slumps for many years.
The company is pursuing a strategy that retail firms of all sizes would be well advised to follow.
As Frost says of any successful retailer: “You’ve got to stand out, you’ve got give great service and you’ve got to offer something different.”