The leisure principals

BDG McColl has boosted its offer with the acquisition of The Principals Group, creating a new leisure and retail division. Matthew Valentine looks at developments in the sector.

BDG McColl has had something of a problem in the image-obsessed design world. Bearing the name of founder and former chairman Stewart McColl has not been enough to give it a reputation for creativity in the absence of the man himself. Arguably, the group has found itself best respected for its office design operation, BDG McColl Workplace.

Workplace, however, is neither high profile, nor glamorous. The jobs which are, tend to be in the sexier retail and leisure markets. It is in these that BDG McColl is often overlooked. Plain bad luck has meant a high level of secrecy around some clients, so that the group has not received public credit for much of the work it has done in the sector.

It could also be argued that as a consultancy with more than 200 staff, owned by mega-group WPP, it appears less of a creative hothouse than smaller rivals.

Directors at BDG McColl will be hoping that last week’s acquisition of leisure and retail design consultancy The Principals Group will plug this perceived gap in its creative portfolio. Sue Wheldon, managing director of the new retail and leisure division of BDG McColl – formerly the retail division – defends her team’s creative credentials, but concedes that the design public’s perception has not recognised them recently. The Principals, a far smaller group, has a more creative reputation.

Industry insiders agree. Richard Watson of Global Design Register says: “From BDG McColl’s point of view it’s a clever move. They are perceived as being weak on the UK high street. The Principals could help that… even though creatively BDG McColl are getting quite good.” Watson credits Wheldon with improvements at the consultancy, which have been paying off. The group is working with high street group Boots the Optician on store interiors projects (DW 7August). More job win announcements are expected soon, says a BDG McColl spokeswoman.

The design industry has long been aware of the convergence of retail and leisure – both in terms of how operators create their offers, and of how consumers perceive them. The common consensus now is that most consumers make virtually no distinction between the two when they are spending their money: shopping is just another leisure activity.

The Principals, described by its founder Jill McArdle as being primarily focused on the leisure sector, therefore fits neatly with the existing retail arm of BDG McColl to make a combined retail and leisure design outfit. McArdle and Wheldon are planning a cross fertilisation of skills and knowledge to make the most of the experience on offer.

The perceived creative skills from The Principals, even if in practice they already existed among staff at BDG McColl, are likely to be heavily emphasised to potential new clients.

“I certainly think that there is increasing evidence in the leisure sector of people wanting to apply retail skills to leisure operations,” says Runé Gustafson, managing director of rival retail group 20/20. “The sectors are blurring. I think it is increasingly difficult to say ‘This is a shop,’ or ‘This is a leisure operation’,” he adds.

The same sentiment is clearly behind the plans being worked on by Wheldon and McArdle. The two groups have yet to work jointly on any projects, but are keen to stress the benefits to clients which will come from doing so. The decision about whether to retain The Principals’ name is yet to be made.

“The leisure sector is becoming much more organised,” says McArdle. While there have been some obvious examples of leisure businesses applying retail practices, in terms of customer service and point-of-sale design for example, BDG McColl is now in a good position to increase the flow of traffic in the opposite direction.

But, is now a good time to be making acquisitions and forming ever-bigger design groups? Businesses around the world are bracing themselves for the next recession – one which both Wheldon and McArdle agree is on the way. While bigger groups have deeper pockets they also have far higher overheads.

“That’s the great thing about being a multidisciplinary consultancy,” says McArdle.

Clients, she argues, will fight to survive through recession, with one of their chief weapons being brand differentiation. Combined leisure and retail experience will become a valuable asset, agree Wheldon and McArdle.

Accountant Willott Kingston Smith partner Mandy Merron says: “In general, the mergers and acquisitions market is buzzing at the moment. A lot of people think it will stop in the next year or so, and that finance is more available now.” But, she says, if there are sound strategic reasons, “it is always the right time to make the right acquisition.”

Clients and design groups alike learned a lot from the last recession. Despite enjoying something of a recent surge in work levels, design groups have been less conspicuous, and more measured, in their behaviour than in the boom and bust days of the 1980s. They will at least enter the new millennium older and wiser than at the beginning of the 1990s.

Company Finances

BDG McColl was ranked seventh in Design Week’s Top 100 listings earlier this year (DW 27 March).

The group recorded a fee-income of 8.2m, contributing to a turnover of 23.2m. There were 202 staff, a figure set to increase due to heavy recruitment in its architectural division.

For the 12 months to December 1997 BDG McColl Retail, the division into which The Principals will fall, recorded a fee income for retail interior design of 1.15m, with a further 500 000 coming from store graphic design.

The Principals just made it into the 1998 Top 100 listing, in 99th place. It achieved a fee income of 1.25m, and turnover of 1.3m.

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