Order in the house

A designer friend of mine went to House of Fraser headquarters a few years ago to give a credentials presentation. Expecting to be ushered into the boardroom, or at least a meeting room, he found himself being squeezed – large portfolio case and all – into one of the tiny booths used for buyers to see would-be suppliers of socks, handkerchiefs and the like. It was, he says, as if they thought they could buy a large design programme out of a suitcase.

Such tales, together with the look and feel of the stores, has always led me to associate House of Fraser with Grace Brothers, the fictional department store in TV’s Are You Being Served? Indeed, to a great extent the issue of customer service is what has held the company back, not in the classic sense of politeness and efficiency, but in the anticipation of contemporary customer tastes and their fulfilment. The awareness – in some cases celebration – of design at the likes of Harvey Nichols, Selfridges and M&S seemed largely absent at House of Fraser, which continued to plod the furrow of a musty traditionalist. That’s changing.

Since the appointment of John Coleman as chief executive in April 1996, design awareness has taken a huge leap forward. Coleman joined from Texas Homecare, where he was managing director, and also had ten years at The Burton Group under his belt, including time as managing director of Top Shop, Top Man and Dorothy Perkins. A lean, clear-eyed 44-year-old, he is an adroit interviewee who, used to handling prickly inquisitions from both the City and the media, delivers diplomatic but direct pronunciations in precise Glaswegian tones.

Attempts to elicit a prognosis for House of Fraser’s branding confusion and inferior design sensibilities of a few years ago are neatly noted, then answered as a declaration of intent. “It’s not really my place to spend a lot of time talking about what happened in the past,” he says. “What I have said and continue to say is that the business wasn’t really clear about what it was trying to do for consumers. I think there was a lack of understanding about who the customers were. We’ve tried to set out to address that. Everything we’ve done since that time is about trying to get clarity in our product offer, in our visual communications, our presentation in the stores, the whole thing.”

These are not empty words. Coleman has instituted a tough management policy on cost-reduction, store rationalisation and sharper buying, together with an increasing emphasis on higher margin private labels. The results have made the retail and financial sectors sit up. Linea, the mens and womenswear private label launched in August 1997, has produced significant commercial success and gained favourable critical comment, while a new 1670m2 store in Nottingham constitutes a profound shift in the group’s approach to store design.

Behind these developments is a chief executive who has a firm belief in the commercial effectiveness of marrying design to customer research. Instinctive conceptual thinking is out, concepts honed and ratified by research are in.

With Linea, the design team worked on three ways to translate the idea of the brand into graphic work, which was then shown to focus groups, with the resulting findings assessed and the most popular route followed. “We’re not asking customers to create things for us,” says Coleman, “but we are trying to test our own creative ideas before we get to the stage of committing a lot of money.”

He draws a comparison with the way Hollywood directors shoot more than one ending to a film then test them. “It might sound terribly formulaic, like painting by numbers, but that’s the way you make money, and we’re in this business to make money not to create design for design’s sake. So we test all the creative ideas.”

It also sounds like adland, where creative ideas have long been put through the pressure cooker of research. “Of course, we don’t want to snuff out the design spark,” says Coleman, anticipating my next point. “I believe strongly in research to understand what customers want, but I also believe strongly in the creative aspects of business, particularly in retail. There’s no point understanding your customers through research if you’re not able to create exciting product and present it in an exciting way.

His experience at Top Shop sparked this belief in research. “We would say ‘create me something new and fantastic’, the designer would create something fantastic, but we never spent enough time working out whether it was fantastic to everyone or just the designer and his friends.” In contrast, the approach of the consultancy behind the new Nottingham store, Kinnersley Kent Design, is clearly focused on the marketplace. “I admire them because there are no airs and graces, no designer flights of fancy,” says Coleman. “They are trying to deliver something that is right for us and right for our customers, while always creating something visually exciting.”

Using consumer research to drive design not only gives designers a platform for creativity, it also gives Coleman and his team a useful management device for supporting new thinking within the company. “It is great to be able to © say ‘we are doing this, not because it is John Coleman’s idea or Glenn Kinnersley’s idea, but because our customers have said this is what they want.’ I find that is a very powerful tool to get people to buy into what you’re doing.”

The new store in Nottingham is helping to make the group’s market positioning clear. Coleman calls that positioning upper mid-market, in comparison to the upper market Harvey Nichols – which he loves, but says is too premium for many of his customers. He wants to create a store that is aspirational without being intimidating – something glamorous for the ordinary shopper. Which is why the Nottingham store uses a range of “friendly” materials: limestone, pale timber, cherry wood and steel, with acres of glass and a sky-load of natural light.

Architectural changes and shopfits like this don’t come cheap, and the Nottingham approach can’t simply be rolled out across the group’s 52 sites. The big turnover Manchester and Glasgow stores are already continually updated; for some other sites the look and feel is simply too “premium”. Barkers in Kensington is being refitted to the standard of Nottingham and new sites at Bluewater in Kent and Reading will equal its sophistication.

Discussion turns to the array of store brand names within the group. Rackhams in Leeds has enormous strength as a local brand and there are no plans to change the store names in such cases, but there is a process of rationalisation at work, to ensure there is only one of each local store brand.

But ultimately, brand rationalisations and a higher profile use of design will mean nothing if it doesn’t enable the group – floated by the Al Fayed brothers in 1994 – to deliver the right mathematics. Its autumn and pre-Christmas performance did little more than beat inflation, triggering a 14 per cent drop in shares over two days, but the longer term trend is healthier, with indications that the restructuring is powering greater profitability and with a classic private label clothing brand due in the autumn. Investors now await the announcement on 25 March of its preliminary results for the year to 31 January. Coleman believes the Square Mile does appreciate the longer term benefits of the new design thinking. “I think the City understands there is a lot of value in the House of Fraser brand. I think they’ve understood that increasingly over the last year or so.”

A culture change at any large company is due to a team of people, but observers see Coleman as the pivotal figure. Richard Carroll of design consultancy Carroll, who has worked on House of Fraser projects, knows several people in the organisation: “Many inside see John Coleman as their main chance to compete, to catch up.” He’s blown the dust off the company’s policies on many things – including design.

Competitors

House of Fraser faces competition from large high street chains such as M&S, Debenhams and Bhs, and local independent fashion retailers. Competitiveness against the former is key, and House of Fraser’s performance, until recently, has been relatively poor. Verdict Research’s findings published in August 1997 saw House of Fraser’s per annum sales of 190 per sq ft compare unfavourably with Debenhams’ figure of 212 and John Lewis’s 453. According to Verdict, a department store should be averaging at least in the low 200s. The move at House of Fraser away from concession-dependency to stronger own-bought lines is expected to have a positive impact on its figures.

House of Fraser’s positioning against ‘upper market’ retailers Harvey Nichols and Selfridges is interesting. Both are attempting to become multisite retailers. Harvey Nichols opened in Leeds in 1996, and plans a Glasgow store; Selfridges is due to open in Manchester in September, then in Birmingham.

In contrast, House of Fraser already has 51 stores and is making a concerted pitch for the upper middle market in some metropolitan centres, while maintaining a middle market positioning in other centres. House of Fraser will need to maintain a relatively broad appeal while Harvey Nichols and Selfridges face the challenge of growing without losing the flamboyance that has come from a single site focus. Department stores also have to react to the rise of the mall; House of Fraser already has stores at Lakeside, Thurrock and the Metrocentre in Gateshead, and its inclusion in the huge Bluewater development is an important strategic development.

House of Fraser history

1849 Business founded in Glasgow by Hugh Fraser and James Arthur

1936 Arnotts & Co acquired

1953 Binns stores group acquired

1959 Harrods group acquired, comprising Knightsbridge store and seven others, including Kendal Milne, Dickins & Jones, Rackhams and DH Evans

1960s-70s Continued acquisition brings in Cavendish House, Army & Navy, Howells, Dingles and Jollys

1984 Fayed family holding company acquires 29.9 per cent interest from Lonrho. Department of Trade and Industry investigation and Lonrho litigation against the Fayeds follows

1985 Fayed family acquires remaining shares. Group now has over 100 stores; store rationalisation begins

1993 Lonrho legal actions discontinued

1994 Fayed family floats group. House of Fraser no longer has any connections to the Fayed family or Harrods

1996 John Coleman appointed chief executive

1997 Nottingham store opened. Linea private label launched. Group has 52 stores, with plans for two further openings within three years.