Theo Paphitis says almost half of sales at Ryman are now online, and that customers at his Robert Dyas and Boux Avenue businesses have also bought more online over the last year. Paphitis, who is perhaps best known for his appearances on BBC TV’s Dragon’s Den, says time will tell whether shoppers will return to stores – and warns that if the ‘business destroyer” of business rates return they will have a “catastrophic effect on physical retail”.
In a full-year trading update, the Theo Paphitis Retail Group said this week that Ryman turned over £123.4m in its 2020 financial year, with earnings before interest, tax and asset write downs (EBITDA) of £7.8m – as in the previous year. Robert Dyas’ sales grew by 2.7%, as ecommerce sales grew by 20% over the year. Online growth is currently running at close to 50%. But investment in both infrastructure and sales meant that at the year end, EBITDA came in a £3.1m loss – down from a profit of £1.8m in 2019.
Boux Avenue, meanwhile, reported a £14.9m EBITDA loss, although the retail group says that progress with a strategic review and plan that started in January 2020 is now “significantly ahead of expectations”.
Theo Paphitis is chairman of Ryman, Robert Dyas, Boux Avenue and London Graphic Centre. He says he now expects online to continue to take a greater share of retail sales. “Having a diverse retail portfolio, each of my brands has responded robustly, and in different ways, to the consumer demand through focusing on the right products and emphasis on our online propositions. The continued investment in our online business has allowed us to build momentum going forward and be cautiously optimistic as we look ahead.”
When stores reopen, he says, retailers will see the importance of local community shops, especially as more people are now working from home. He says a settling in period of around four months will be needed to understand levels of customer demand and footfall.
But he warns that business rates – suspended for retailers since the outbreak of the pandemic last year – could have a disastrous effect on the high street if they return in their previous form.
The Chancellor must recognise that if business rates, or as I call it, the ‘business destroyer’, returns, it will have a catastrophic effect on physical retail and it will be Goodnight Vienna. Where there is a realignment in costs in this area, then there is a positive future for stores. Re-addressing business rates has the power to help build retail up again, or indeed destroy it. Retail is watching.”