Bedroom and kitchen specialist Michael Copp is currently proving his business credentials as he stars alongside 15 other contestents in the latest series of The Apprentice. Rebecca Nottingham went to meet him....

We often discuss the benefits of diversifying within the pages of kbbreview. In fact, in our 'How to make Money' feature in the February issue, we identified several retailers who've successfully diversified their retail portfolio in order to expand market opportunities and maximise profit.

We regularly suggest fitted bedrooms as a relatively easy add-on for kitchen retailers looking to broaden their scope, but it's unusual to find a bedroom retailer that's diversified into kitchens. However, that's just what Michael Copp, owner of the Essex based Dream Bedrooms and Kitchens showroom did.

Frustratingly for kbbreview he's sworn to secrecy on the matter, but Copp is currently proving whether he's got what it takes to survive in business on national TV. He beat thousands of hopefuls to become one of 16 contestants battling it out on the BBC's hit show The Apprentice for the opportunity to win a £250,000 investment in business from Lord Sugar.

Copp started out as a self-employed bedroom fitter in 2003, working as a subcontactor for one of the large multiples. Over the years, his business continued to grow organically thanks to business generated through the multiple chain and a succession of private jobs.

Despite his continued success, effectively selling bedrooms from the back of a van, he recognised that in order to grow the business he needed to diversify into kitchens and set up a showroom.

"I knew that if I wanted to take the business to the next stage, I had to introduce kitchens to the mix," he explains. "To make that happen I knew I needed to have a showroom to display the product. It was Catch 22. People don't mind parting with £3,500 for a bedroom without being able to see the product on display, but when they're spending £10,000 to £30,000 they want to be able to look at displays for ideas and touch and feel the product themselves."

In 2009, Copp moved the business into a showroom, on a bustling high street in Woodford Green, Essex. Not quite TOWIE country, but close enough.
"It's a pretty affluent area, although the high street itself may not reflect that," Copp explains. "It's a good area, the average house price is between £400,000 and £600,000 so there's definitely money here."

The showroom may be modest; to keep overheads low, Copp persuaded the landlord to split the showroom in two when he took on the lease; but he has certainly made the most of the room available. There are eye-catching kitchen and bedroom displays, directly in the front window, and he's been deliberately adventurous with those designs, particularly on the kitchen side, in order to catch the attention of passers by.

High street
"You have to weigh up the advantages and disadvantages of high street retailing and industrial estates," he says. "Yes, it's more expensive on the high street, but you're in a more prominent position. If you're on an estate out of town, people have to know you're there in order to visit. You have to be well established as a business. We've been here for two years and people are still learning about us."

Although predominantly a bedroom furniture specialist, Copp had dabbled in kitchens throughout his career. When he introduced the kitchen offering to his showroom, he initially took charge of the sales and designing but as leads increased he felt it was time to bring in a dedicated kitchen designer.

"Although I'd learnt a lot about kitchens over the years I felt that to do it right, it was essential to bring in a dedicated designer with lots of kitchen experience," he explains. "Kitchens are more involved than bedrooms so I thought it was wise to bring in someone who was experienced in that field."

Like many of the independent retailers we speak to, Copp explains that the majority of his business is generated through recommendation, 60% in fact. The remaining 40% they get through advertising leads and passing trade. There is also a  bathroom showroom over the road, which he says also works well for business. So what does he put this success down to?

"I think people like that I was a fitter myself. I know the product inside out, of course, but I'm also familiar with how it's installed and that's an added bonus as a designer," he says. "I'm a salesman, surveyor and business owner all rolled into one. We're not just interested in selling units, we're here to sell the customer what they want and not what I want to sell them. We are committed to offering an exceptionally high standard of service and installation."

Although he describes the market in general as "challenging" he views bedroom furniture as a sound market with potential for growth. "We're still solid on the bedroom side. There's certainly a market for them," he says. "It's a fairly straightforward market too, in my opinion, especially in comparison with kitchens. OK, so the average order value isn't as high, the average spend here is around £3,500, but if you do three or four of those per month it definitely adds up."

He explains how bedroom sales generate 70% of  business, in volume terms, with kitchens currently making up 30%. Not a bad chunk considering he only introduced kitchens into the mix two years ago. And this venture into kitchens isn't just a passing phase, more a solid investment in the future of the business, something that he's keen to point out.

"I certainly don't see the kitchen side of the business as an add-on. My short and long-term aim is to increase sales in this area and bring the figure in line with bedrooms," he emphasises. "The average spend on a kitchen is around £18,000 and you can add value to a kitchen sale much easier than you can on a bedroom. There's huge potential for us here."

Copp became a Hepplewhite dealer in 2006, after the range on offer from his previous supplier left him frustrated. His passion for the bedroom market, and Hepplewhite in particular, is infectious as he waxes lyrical about the company and its portfolio.

"The more and more I got into the work and became more adventurous with designs, the more I realised that the product I was working with was quite restrictive," he says. "I needed a more flexible product so I took on Hepplewhite. They have such a fantastic portfolio of products to work with but their attitude towards its retailers is also spot on."

He explains how Hepplewhite works closely with its retailers to come up with plans to help them grow the business. They offer regular promotions and incentives that help encourage consumers to buy from their local independent and give retailers the edge over competition. Something Copp feels other manufacturers, particularly, he points out, in the kitchen arena, should consider more often.

"It should be a partnership between supplier and retailer. You've got to work together to help a business grow," he tells kbbreview. "At the end of the day if we're not here, they're not here!"

Dreams specialises in Mereway furniture on the kitchen side and he insists he's very happy with the relationship he's built up with the company and has been particularly impressed by its latest strategy, designed to help retailers combat the mid-market squeeze.

"Price is a big issue for us because customers are always looking for the best deal," he says. "I think Mereway are moving in the right direction with its new brand, Trend Interiors. We're always coming up against local builders who've got a Howdens account and they just beat us on price every time. But I think Trend will definitely give us a more competitive edge."

When market conditions are tough, there is a strong risk that retailers hungry for any sale will discount heavily and drop margins, something that Copp insists he avoids at all costs. "I'm looking for a margin of between 30% and 40% per sale because if you can't get that, you're not going to survive. There are retailers out there willing to drop their margins to secure a sale and all I'd say is be careful," he warns. "If you're not keeping up your margins but your overheads and outgoings remain the same then you're heading for disaster."

Despite avoiding the heavy discounting strategy himself, he admits he's sympathetic to the plight of any retailer trading through the market's current conditions. "I can see how it happens. Everyone's looking for a good deal, everyone's penny-pinching and if you're strapped for cash it's difficult to say no to any sale, even if the profit margin is small," he says. "Perhaps, if everyone stuck to their guns, didn't discount heavily and aimed for their margins, maybe consumers wouldn't be so keen on getting deals and trying to knock us down on price all the time."

Support
So is there enough margin on bedrooms, kitchens and associated products? And are suppliers doing enough to help retailers battle the difficulties?
"I'm happy with the margins we're making on the bedroom side but the kitchen side is much more difficult," he explains. "In my experience, suppliers on the bedroom side are generally far more supportive than kitchen manufacturers. If I'm looking for discounts or deals on the kitchen side, they're very rigid on when and what they offer whereas on the bedroom side they're always willing to help us."

Despite feeling the effects of the mid-market squeeze, Copp happily admits that business is solid. He describes last year as its best on record and explains that they are fully booked right up to the end of this month with plenty of quotes which help boost his confidence for the year ahead.
He acknowledges that market conditions remain tough but explains that he's 'cautiously optimistic' and determined not to let it thwart his long-term plans of a second showroom and a potential venture into the world of e-commerce.


Michael Copp on...
... Internet pricing
We get customers in here all the time quoting prices of appliances they've seen online. Most of the time those prices are only around £30 more than I can buy them for. We are increasingly losing out to the internet on price as people are looking for a good deal and, in my experience, they're less interested in quality these days; it's all about price. By making their products so widely available and at such low prices on the internet, appliance manufacturers are bringing their brand names down. They have the power to put a cap on pricing and say that products must be sold at that price by everyone. That would wipe out price wars and customers would just go to the retailer or buying chain that makes them feel most comfortable.

...Charging for design
We don't charge for design and I can't see it ever working because the field of retailers is just so diverse. Of course it would be nice to be able to charge for our time but it's hard enough getting the sale these days without adding pressure. If there's a retailer down the road not charging for design why would a customer come to us and pay more? It's frustrating when we spend time putting together a quote and a design. We've done designs for people who've taken them away to think it through and then we've never seen them again. But I don't dwell on lost business, I live in the here and now. I think if you question the customer right, you can normally tell if they're serious about buying or not.

...Discounting
I believe in offering genuine sales, I don't believe in offering a sale all year round. I don't think that strategy is good at all and I also think consumers are wise to it these days. We do offer genuine discounts in line with terms we negotiate with our suppliers.

...Multiples
In terms of service and quality I'd say that multiples, on the whole, have certainly upped their game. They also make consumers generally more aware of what's out there in terms of KBB products. Independents are passionate about what they do, they're not only interested in pushing sales. The multiples are target-driven so they're more about getting sales through the door. One of the visions I had when I set this place up was for it not to become a high-pressure sales environment. As frustrating as it can be sometimes when you think, 'I just want to push for this and every sale', you've got to respect the customer.