This month we’ve turned our spotlight on Hull to bring you a wider perspective on how kbb businesses are faring in the Humberside area. Chris Frankland visits two typical retailers and discusses the challenges they’re facing in a difficult market.

 You don’t need to be a genius to realise times are difficult. And in this day and age job losses strike at all levels, from the shop floor to the board room.

 

In the case of Hull and Humberside, you have only to look at the 1,400 job cuts approved last February by Hull City Council, the 900 or so jobs currently in jeopardy at the British Aerospace plant in Brough and the 240 staff already shed at the Comet call centre, to realise that professional people are joining the dole queues, too.

And this strikes at the heart of the customer base for many middle to top-end KBB retailers.
During my visit, I called on two retailers at slightly different levels in the market – Kitchens on Tap in the Hedon area to the east of Hull, which is in the lower middle to middle sector of the market, and Mulberry Kitchens, also on the east side of Hull, but firmly in the bespoke top end of the market.
Geoff Chivers, managing director of Mulberry Kitchens. Puts the region’s current economic plight in perspective: “We recently had an order for kitchen cancelled because the guy worked for the city council and was an executive on the forensic science side. He was hit by the budget cuts – a big salary, and he had to cancel. “Policemen, teachers, they’re all in the market. They’re being hit by cuts or the fear of cuts and executives are being paid off.”

There is a ray of hope on the horizon in the shape of a new Siemens plant that will manufacture wind turbines, not for from Mulberry and directly opposite Kitchens on Tap.

Steve Hardy, sales manager and a director at Kitchens on Tap, says: “It will be right opposite us where they’ll be building the big new Siemens factory for the wind turbines. That’ll do us good. It’ll be employing around 5,000 people, so we should pick up some business from that. And we get lots of commuters coming past us.”

And that’s welcome news, as in the latest figures from the Local Data Company (LDC) show that the North and Yorkshire ranks second worst in terms of national town centre vacancy rates at 13.5% behind Northern Ireland.

Indeed, the latest figures from HullBID show that monthly footfall on the old Whitefriargate high street was down 24% in 2012 compared with 2011 and has been declining steadily since 2009.
A walk down Whitefriargate quickly confirms this, with many shops vacant and bearing ‘to let’ signs. Difficult to believe that this was once the beating retail heart of Hull for the first 70 years of the 20th century. But with the arrival of three new town-centre shopping centres, it has suffered a decline. Sadly, its bid to win funding as one of the first Mary Portas Pilots was unsuccessful.

Local companies are becoming more positive, according to the latest Quarterly Economic Survey from the Hull and Humber Chamber of Commerce (Q1, 2012). Twenty-four per cent of companies surveyed showed a rise in domestic sales, while 57% said that sales in the domestic market were steady. So, it could be worse.

 

But the retail picture is not all doom and gloom. Anything that brings people into Hull is good news for local KBB retailers and there footfall figures for the shiny new St Stephens Centre, which opened in 2007, have almost doubled, standing at just over one million in 2012 compared with 563,000 in 2009.

And in 2012, the Prospect Street shopping centre saw a 20% increase in footfall to 304,000 from the 253,000 who crowded its malls in 2011. At Kitchens on Tap, financial director Tony Mossop strikes an optimistic note: “Hull and Humberside always gets a bad press and it has had its ups and downs. The aerospace business is under threat, Comet has just closed a call centre, but then there is Siemens moving in with 5,000 more jobs, so there’s good and bad.

He adds: “I think Hull has a lot going for it and is an up-and-coming area. But newspapers always paint it blacker than it is. There are big shopping centres and attractions, so people are coming in. It has great potential.”

 

Kitchens on Tap

The two retailers we visited in Hull couldn’t be more different. Kitchens on Tap has only now, in its current guise, been trading for four months, compared with the 13-year track record of Mulberry.
Kitchens on Tap with its average kitchen sale of £5,000 to £6,000 is currently operating in the lower middle to middle sector, whereas bespoke Mulberry Kitchens are tending to sell for £35,000 to £40,000.
Kbbreview is no stranger to either of these two, retailers, as our mystery shopper visited them both towards the end of last year. And while Mulberry’s “classy showroom with its classic displays of solid wood and painted kitchens” won the day, Kitchens on Tap merited a ‘very poor’ rating as its “few rather tired kitchens were dusty and not brilliantly executed”. But directors Tony Mossop and Steve Harding at Kitchens on Tap were open from the outset that they completely agreed with the mystery shopper’s comments.

 

So what made them buy the business? Well, they both knew the business well from experiences in their previous jobs – Mossop at F&D Kitchens (part of Crestwood), which supplied the company with carcasses and Hardy at Allied Manufacturing in Manchester, which distributes Crown Kitchens, Bushboard, Astracast, Carron sinks and numerous appliances and also dealt with Kitchens on Tap.

The business had been going for around 10 to 12 years and the latest manager, Gary, knew the kitchens market and had built up a good business until it all fell part when he had to bow out because of ill health.
The good reputation built up by the last manager was the main reason they decided to keep the name. That and the fact it was well known locally and the fact that the signage would have cost thousands to change at the formative stage of the new business.

When Hardy was made redundant and Mossop decided it was time for him to move on, they saw a golden opportunity in the ailing Kitchens on Tap, which they both believed had great potential.
As Hardly recalls: “I had lots of experience – 37 years – on the retail side and Tony had lost of experience on the manufacturing side. That fits well together. So we signed the papers on New Year’s Eve [2011].”
And apparently, it was in a bit of a state when they moved in.

According to Mossop, it was “pretty bad really – it was the original showroom but with lots of displays ripped out. They had been running a closing down sales and whole display had just been ripped off the walls”.
Hardy adds: “At first we were selling worktops because we had no kitchens. We took down a dividing wall that was making the showroom look small and opened it right up. It was a case of just getting in, getting the showroom design and start selling – because bills start straightaway unfortunately.”
Many might regard it as a brave move to set up in the midst of a recession. Mossop agrees: “The first year is always the hardest. But when the recession ends and business picks up, things should be fantastic.” 

Hardy adds: “Starting up is always hard but with all of our years in the industry Tony and I were well known and that helped. We pulled in quite a few favours.

“I didn’t think the business would grow as quickly as it has. So far this year we have done 21 fits in just four months. I thought it would be steady. Our conversion rate is good. We get a lot coming to us from B&Q and we can be more competitive on the fitting side and we offer a more personal service. A better all-round package.

“So far all our fits are kitchens. I am expecting the bathroom side to grow. And is that can get up to the same level as the kitchens, that’s be brilliant. And I am sure it will. It’s just a case of getting people coming in for bathrooms.”

So what changes did they make to the showroom and the range sold? Hardy admits: “The ranges on offer were very poor, very basic. Hardboard backs. Lower low-end stuff. You’ve got to sell a lot to make any money. We wanted to put in something of better quality, but not very top end. We’re doing the Lakes range – they gave us a good deal to set the showroom up, so we’re doing all their ranges. We’re also selling Crown as I have had a history with them for over 25 years. We’re looking at the Imperial range and also the Lifespace studies.

 

We should sell lots of bedrooms, but there are lots of people selling bedrooms in Hull.
“We’re still ripping out and refitting the bathrooms section, but we see that being 50:50 with kitchens in sales terms. We’ve fitted one bathroom since we opened and the customer is over the moon.
“The fitters I have had I’ve had for 17 years and they did the showroom for us. Since we opened we have done 21 fits.” Plus, adds Mossop, they are doing lots of worktop replacements, new sinks and taps, new appliances for people, as well as replacement doors.

Who are their typical customers now? Mossop explains: “We get all sorts – young couples, older retired couples. Everybody really. And so we have a good selection and variety. Modern glosses, handle-less and traditional. We’ll sell Shaker doors every day of the year! 

 

Hardy adds: “Average sales for supply and fit is around £5,000 to £6,000 at the moment. We have done a few over £10,000 but a lot of customers in Hull know us for being at the lower end. We are turning that round. People see it’s a lot nicer showroom and it will cost them a few more. We are keen and we do deals.
“The location is excellent, plenty of passing traffic on the main road. The traffic is non-stop and you can’t miss our signage from the road. Everybody seems to know is, which is why we kept the name.”

And what of the future? Hardy outlines his thoughts: “We are thinking about opening the showroom out into the mezzanine level with a staircase and moving the bathrooms and bedrooms up there. It’s a space we aren’t using. There’s scope to do lots of things. And that means we could extend the kitchen area further.”

Mossop adds that things are moving along well for the business. “With our advertising, the message is getting out there that there’s been a change. We’re getting lot of recommendations now – a lot of repeat business.”

 

Mulberry Kitchens

Mulberry may be geographically close to Kitchens on Tap, but it couldn’t be further removed from them in terms of its clientele. It was a finalist in kbbreview’s Kitchen Customer Service of the Year award for 2012.

It is in its 13th year of trading whereas Kitchens on Tap, in its current guise, is still in its infancy.
But even though its average sale may seven to eight times a typical sale for Kitchens on Tap, Mulberry has not been immune to the effects of the recession.

Geoff Chivers admits: “For the first four months of this year business was up 148% on last year (January-April 2011). But 2011 was probably one of our worst years ever. It was bad. We dropped down considerably and the only way was up – or we would not still be here. It’s as simple as that.
“People here were being made redundant left, right and centre. We had notification that the British Aerospace factory was going to go. That put a lot of good money earners into a situation where they were worried. And all I need is for worry to be inserted into the brain of a potential kitchen customer. Because what we do is a kitchen. Nobody NEEDS a kitchen.

“Policemen, teachers, they’re all in the market. They’re being hit by cuts or the fear of cuts and executives are being paid off. A deputy head teacher can make £70,000 a year and if their wife is earning too, that’s a £100,000 family – my kind of customer.”

Colleen Barber adds that they even lost an order for a £35,000 kitchen from a retired couple because their son had been made redundant.

Mind you, 2007 was a good year because of the floods that hit the area, which meant a lot of people were replacing ruined kitchens, and that continued into 2008. But the business was hit during 2009 because Chivers had to spend a little time away from the business for personal reasons.

Service is very much a key element in what Mulberry offers. Chivers says they specialise in bespoke. He elaborates: “We specialise in bespoke – whatever you want, how big, how tall, what shape, what colour? And it will be done. They’re spending more with us, so they get what they want. And when I say bespoke, I mean we will make it to suit their requirements in every way we can – colour, cabinetry, fittings, etc.”
Mulberry uses Tech Spec, a local manufacturer, to supply its carcasses – all in 18mm Egger board – and it supplies no one else in the area. To this they add the client’s choice of taps, sinks, appliances, worktops, etc, All carcass fittings are generally Blum.

Barber adds: “What makes us stand out is knowledge and caring about what we do. How much time we take with them.” Chivers explains: “We offer to help and welcome them in and not scare them away by pouncing on them. By pointing out little they may not have seen before, such as slide-away ovens, we get their interest. We get their trust. We are often baking and cooking, things are working, there is the smell of baking and cakes. We have a working Neff coffee machine. Once they have been won over, they know we’ll not twist their arm up their back. Then we explain the process.”

And budget, he says, does not tend to be an issue, because as soon as customers walk in, they can see that they do not sell budget products and the quality of what is on offer. He explains to customers that it will not be a quick process and that home visits will be involved to get the final product just as they want it.

As he puts it: “There’s no limit on the number of times a customer can come in and talk to us. We tell them there’s no charge for our plans, but they remain ours. And they can change their mind about things as many times as they want. But if you listen to them, you should get pretty close first time. And hopefully we’ve put in enough tricks to turn them on – whatever it is they want.”

 

Interestingly, Mulberry monitors where its customers hear about them, and Barber tells me that the latest results show that 80% of people now find them through the internet, proving that the web can be a blessing as well as a curse.

Mind you, on the kitchens side, Mulberry does not find online competition a problem, although it is on the appliances side. Chivers adds: “One big way they can help is to make sure that the pricing structure is geared in a way that does not help little grey men selling over the internet.

“I’d love to see the return of retail price maintenance. Everybody got a fair crack. I have to pay wages and rent and rates on a property. My internet competition doesn’t have that. So they certainly shouldn’t be able to obtain the appliances for less than I do.”

So what does the future hold for Mulberry? Chivers answers ruefully: “About four years ago, we were thinking of adding a mezzanine floor to the warehouse and make it into a bathroom showroom. The initial investment would have been around £60,000 for the mezzanine floor and then another £30,000 to £40,000 to fit it out. But thank Christ we didn’t!”

Mulberry does the occasional bathroom or bedroom when clients ask for it, but they have no plans to change their successful formula.Chivers concludes: “The quality of footfall we get now is excellent. You’ll see many showrooms advertising sales, so many per cent off, free dishwasher or whatever. We’re immune from having to do that. We have never ever done that and we never will. Take your eye off margin and you’re lost.”

So, Hull may have had its ups and down recently, but judging from the buzzing town centre shopping centres dragging people into the centre and the experience of the two retailers we visited, things look good for the future.