09 August 2010

PROFILE: Betta Living

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Smashing your growth targets in the midst of a recession can't be easy, but Oldham-based retailer Betta Living claims it's done just that. Tim Wallace talks to executive chairman Noel Dean...

It's tempting to be cynical when a retailer tells you they're bucking the market trend, but Betta Living seems to have genuine grounds for optimism. Not only can the kitchen and bedroom specialist report a 46% uplift in the first 16 weeks of the year, but it's on course to beat the challenging targets it's set for the months ahead. The company has also just opened its 16th UK store and there are plenty more in the pipeline. 

Not bad going in the teeth of a recession, but talking to executive chairman Noel Dean it's clear these guys know what they're doing. For one thing, the company has what Dean frequently refers to as a sense of heritage. Formed way back in 1966, you get the feeling they've seen it all before and learnt valuable lessons along the way. They've also become experts at knowing how to market themselves and their products as effectively as possible.

The privately owned business currently employs 70 people at its manufacturing facility based in Oldham, Lancashire, and has a team of 80 sales designers, 100 marketing staff and a network of more than 80 fitting teams. 

Betta Living also has a long-established expertise in negotiating long-term contracts with premier retail shopping centres throughout the UK, providing them with plenty of potential for lead generation.

I caught up with Dean recently to get the inside story on its continued prosperity... 

Q: How do you explain the 46% uplift since the beginning of the year?

A: The real uplift is probably 10% on 2008, but we're 46% up on last year. It's down to a number of things - good designs and designers, good value offers and new exciting products. Another part of it is the fall out of the market of people like MFI. We've picked up market share and where some of our competitors have struggled we've gained some good people.

Q: How have turnover and profits fared during the downturn?

A: Our turnover in 2008 was £18.5m with profits of £402,100. Turnover in 2009 was £18.7m so we kept roughly the same. Profits were £434,200.

Q: So what's the target for 2010?

A: We've planned for a turnover of £24m and we're on target to beat it, only just but it's quite a challenge. We replanned after the first three months because it was going so well and upped it a little bit.

Q: Have you been surprised how well business has gone this year?

A: I was delighted. I don't think I was surprised because of how we went into the year and all the preparation. But if you'd asked me at the start of the year if I'd expected to be that far up, I'd have said no.

Q: Did you see the recession coming?

A: No, I didn't, but I'd been through two recessions before. When you're more seasoned you don't tend to panic as much. 

Q: How did you use that experience?

A: The worst thing you can do is cut down on your marketing exposure. It's getting that headline figure, particularly if you've got a reasonably-sized organisation. Offering value for money is essential. Part of that is experience. Hold your ground, look at every KPI [key performance indicator] and micro-manage the business. We began having meetings every Monday morning to digest the enquiry levels, the sales figures, the fit figures, etc, and it's something we're continuing to do. 

Q: Has it been a case of working smarter rather than harder?

A: I think you have to look deeper into your results and what makes them. Look at your supply chain. We've told certain suppliers that next year is going to be difficult, and maybe went with fewer of them but gave them more.

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Q: Do some firms use things like the snowy winter, the election and the Budget as excuses for struggling sales?

A: We worked very hard to ignore the snow and keep the morale of the sales staff high. The sales director was determined it wouldn't affect him. We switched the telesales to the areas where there was no snow and it worked very effectively. We worked very hard because it was a peak time for us. It was the first week of the sales, we were looking for our first million-pound week. We would have done it without the snow, but we still got headline figures of £720,000, which was a big uplift from the year before.

Q: Were you hampered by uncertainty over the election?

A: My advice to any small independents is that unless you've got more than 5% market share things like that don't make any difference. It's what people do to their own business that matters. I think you can get wound-up and negative about other things going on. We bring out a better product with better value and we get in the right newspapers at the right price. Outside forces are nothing to do with it. 

Q: Where do you think some of your competitors have got it wrong?

A: Looking at the demise of MFI, it had to be the estate, the size of the outlets and the cost of the rents. They had great market share. With some of the smaller independents, their marketing stance is poor or non-existent. Throughout the hard times of the recession, we put our marketing budget up. They took theirs down. We were bold enough to spend the same amount and if we got less business we stuck with it. There's an old Chinese proverb that says a man with no target hits nothing. 

Q: Is the overall market on the road to recovery now?

A: I think it's going to be a difficult year for sure. It's all about how you're set up. We have quite a flexible cost base. We contract out all our transport, for example, so if there's a downturn we don't have vans stood around. So that's a part of business we've outsourced to make it more flexible.

Q: Any plans to diversify?

A: No, absolutely not. We could put a Betta Living store in every town and there's quite a lot of towns we're not in, so why complicate it? I think it's wise to stick to what you do best.

Q: Which appliance brands do you supply?

A: All the majors but we do a lot with Baumatic, we've got a dual-branded brochure. We're not hung up on brands, we just want our customers to get the best value for money and we don't get any customer service issues. Customer service is the most important thing of all. On the bedroom side, 30% of our orders come from recommendations. We sell two bedrooms for every kitchen. 

Q: Your stores are 60% bedrooms, 40% kitchens. Why that ratio? 

A: There's a very big heritage for bedrooms within the organisation going back to Betta Bedrooms in 1966. Our main competitors for bedrooms are Hammonds and Sharps and they don't like us very much. Our standard offer is a full cabinet, we don't use a frame system. Sharps and Hammonds both have a frame system as an entry-level product whereas we have a carcass system. 

Q: What do you make of the top end of the market-place? 

A: People are buying a brand but there's fewer people in the market who are willing to pay a premium for it now. In the current climate, it's still just a cabinet with doors on, a functional kitchen with nice worktops. You don't need to pay a king's ransom to have a good quality job done. It's more of a status symbol.

Q: Has anyone in the industry influenced you over the years?

A: Neville Johnson was a great innovator and marketeer and had a lot of pluses for the industry for sure.  

Q: Do your showrooms have a consistent feel to them?

A: They've all got a corporate image and same point-of-sale material. They're typically around 5000sq ft and we put 12 bedrooms and about 10 kitchens in each one.The first secret of a good showroom is well-trained staff though. Location is also very important and you have to have the right rent. The signage also has to make it look like you can get a deal. Our point of sale is akin to DFS.The stores are all linked up to a VPN [virtual private network], which is real time. So if you went into Bluewater looking for a bedroom, saw one and gave the person on the stand your name, it would come through on a palmtop and we could ring you before you got back to your car. That's how we compete with the big sheds. They won't have a highly-trained person or the product knowledge. We try to offer designs that look like they could be Mark Wilkinson or Clive Christian, but you can buy them for an affordable price. And because we do interest-free credit, it's easy to pay and we don't need a deposit.

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