The high street is dead. Tell that to David Adams who parachuted into stricken camera retailer Jessops last year and embarked on a mission to save the company. He’s only just begun, says Sam Metcalf.
It’s hard to understand what David Adams saw in Jessops when he took over the role of executive chairman. Here was a man sat comfortably as deputy chief executive and finance director at House of Fraser. Why on earth did he want to up sticks and go to a company that was, frankly, failing?
“I thought it would be a great challenge,” he says, without flinching. “Before I came here Jessops tried to grow too quickly. It was first into the digital market, but then it got carried away, and aspired to have too many stores when it didn’t have the infrastructure to cope with them.”
Rewind then to 2007, which was Jessops’ anus horribilis. The company shut 81 stores and laid off 550 people in an attempt to cut costs. Over the past year total sales have fallen by nearly 25 per cent to £134.8m. But there is a thin ray of light: operating losses dropped from £6.3m to £2.9m
“What we’ve got here is a great brand selling great products,” says Adams, “and people will always want to buy that. But we have to be realistic in our ambitions. Jessops started selling sat navs. Now, if I wanted to buy a sat nav, I wouldn’t go to Jessops for it. You can hardly blame our customers for seeing it that way, either. I really think we lost sight of our core market a while back. This is something I intend to reclaim.”
Adams says that when he arrived in May 2007 he “drew a line in the sand”, and began building his own team around him. He sounds positive, but sat in the somewhat desolate Jessops head office on a bleak Leicester industrial estate, it’s hard to see how, or why.
I had expected more from a sexy brand like Jessops. But its head office is hidden away on the outskirts of the city, and I’m not surprised. It seems the cost-cutting also extended to where staff work. But Adams isn’t bothered. He says: “The last year has been extremely satisfying. This is a great retail business, and I’ve really enjoyed it.”
It’s almost as though he’s trying to convince himself, me and Insider’s photographer. But then a bit of fight bubbles to the surface. “Our main motivation here is to prove people wrong,” he says calmly. “There have been plenty of people hoping we would go under, but that hasn’t happened.”
Adams will have been buoyed by the fact that Jessops’ bank has not deserted the company.
Indeed, he says the relationship with HSBC is as strong as ever, borne out with the news that Jessops has secured longer-term funding of £49m from the bank.
“The new facility will put us on a firm financial footing for the medium term and remove the uncertainty surrounding the availability of funds post-December 2008, when the original package expired,” he says.
Staff at all levels at Jessops must have suffered more than most over the past 12 months, but Adams believes the worst is over, which is more than can be said for most retailers, of course.
“The immediate aim is to stabilise the business,” he says, “and recover the confidence of the shareholders.
We want to let people know we’re here for the long term. However, it’s unlikely there’ll be any store expansion. Some of them aren’t in the greatest shape, and we need to concentrate on our existing outlets and make them more appealing to customers. There also might be closures. Some of our stores are in the wrong geographical place.”
It’s this sort of brutal honesty and ability to make tough decisions that enabled Adams to take a half a million pound bonus at Christmas. In April Jessops also axed its Central Lab processing business, which had become inefficient after mini-labs were introduced in all but 30 of its stores.
Adams says: “We’ve outsourced the production of our prints to CeWe Color, which will improve efficiency, while maintaining quality.” This has allowed Jessops to relaunch its photo-gifts and photo-books offering, aligning its in-store and online offering for the first time.
Such steps, Adams hopes, will lead Jessops back to what he considers its rightful place at the top table of the high street. But that won’t happen overnight, he says. The credit crunch is squeezing retail like never before, but he seems confident.
“I wouldn’t still be here if I thought Jessops was the only place people could buy cameras. We’re about much more than that. We need to have a strong service element to our proposition, too.”
Adams then makes an incredibly honest appraisal of his business. He says: “For a while Jessops was guilty of leading prices down. I’m not saying we shouldn’t be competitive, but with a name like ours we shouldn’t be the cheapest. Price isn’t the only factor in someone buying something.”
Adams goes on to mention that Asda is selling digital cameras as loss-leaders – remarkable when you think about it, or maybe it’s an indicator on how much supermarkets make on a pound of potatoes these days.
He continues: “If you look at department stores, the market is polarised. Primark, Matalan and Selfridges are doing well. At House of Fraser we used to sell a pair of jeans for a £100.
If Asda was selling a pair for £4, we add £10 to the price of ours. People want to pay for the best brands, and we have to concentrate on that. We need to play to our strengths – we have half the UK market for Nikon and Canon cameras. Now we need to build on that by offering a superior service.
“Most people who buy a camera want to know they have some comeback on it. They want to know they have some after-sales care, and they want to know they’re buying from people who have the knowledge about that product. That’s where we will come out on top.”
It’s interesting that Adams plays the sort of good cop/bad cop role. One moment he’s admitting the company’s failures, the next he comes out all guns blazing. It happens again.
“Choice isn’t everything,” he says. “We had a range of 140 compact cameras when I arrived here. I want that down to about 50. What we should be best at is the first layer of choice.
We need to specialise in that area.”
But what of hard figures? In its latest trading statement Jessops reported like- for-like sales had dropped a further 8 per cent on last year. Is the Adams effect having any... well, effect?
He says: “In March we indicated we were on track to meet our expectations for the full year, ending 30 September. But the macro environment remains challenging and the continuing decline in sales in the weeks since that announcement means I expect to make a small loss before non-recurring charges and finance fees for the year.
“We’re going to continue to drive profitable sales as hard as we can in this difficult market.”
If Adams has his way, this Leicester tiger will one day, in the not too distant future, roar again.
Who’d bet against him?