Exceptional, June - December 2014
Maintaining the family vision
John Perkins is running one of the largest privately owned retail groups in Britain, and as part of the second generation, he looks forward to stamping his own mark on Specsavers’ future.
A sight for sore eyes from Australasia to Scandinavia, the Specsavers logo is synonymous with optical care the world over. A far cry from its origins in a back bedroom in Guernsey, today the family business has more than 30,000 employees and 1,662 stores.
John Perkins, now the second generation to run the business, reflects on the company’s success as Specsavers enters its 30th year, riding high with £1.8b (US$2.95b) in global revenue. Perkins’ path to the summit began when he returned to the family business after a stint at an accountancy firm.
Since then, he has built his Specsavers career from the ground up, rising from store assistant to finance director, and in 2007 he became Joint Managing Director with his father, Doug. Indeed, he can genuinely describe himself as a lifer at Specsavers.
Until you know how to run a store, it’s very difficult to put anything into context.
He even remembers calling to get sales figures from individual stores when he was 14. Perkins was 12 years old when Doug and Dame Mary Perkins launched Specsavers from their Guernsey home in 1984, and they soon expanded into the UK, taking on established opticians Dollond & Aitchison and Boots.
Having spent his formative years driving up and down the UK looking for potential store locations with his parents, it’s not surprising that Perkins should end up back at the family firm. And it’s a business that has in some ways changed dramatically and in others stayed the same.
It was in those early days with Specsavers that Perkins says he learned the most. “Returning to work in the store in Plymouth, I was a blank piece of paper, and I probably didn’t even know where the pen was.
And while you can have some views and some perceptions about where the business should be going, until you know how to run a store, it’s very difficult to put anything into context.” For that reason, new Specsavers recruits, regardless of whether they’re working in IT, HR or marketing, must first work in stores.
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“Because it’s critical not only to understand that operational element, but also to appreciate the partnership aspect of the business,” Perkins says. “In order to have credibility with a partner, you need to be able to empathize with them and the challenges they face.”
This partnership structure has been critical to Specsavers’ transition from independent retailer to high-street powerhouse. Take any Specsavers store: typically there will be two partners in charge, one optician partner and one retail partner.
“The role of the optician partner, not surprisingly, is to test eyes and to drive the clinical standards of that store,” Perkins explains. “And the role of the retail partner is to drive the business, look after customers, give great customer service, and lead and develop the team.
“The principle is that, if you go into that store, they are going to look after you as if you are their best friend, because fundamentally it’s their business.” It’s a clever system that allows each store a degree of autonomy while maintaining the singularity of Specsavers’ brand — critical for such a consumer-focused company.
A business based on partnerships
Legally, each store location is a separate entity with two classes of shares: “A,” or equity shares that afford shareholders a profit share from that store, and “B” shares, owned by Specsavers. In most stores, the two partners will each own 50% of the A shares and therefore split the profits equally between them, while the B shares are voting preference shares, which give control but not profit sharing.
“The B shares enable us to maintain overall strategic control over certain issues,” Perkins explains. “For us, a very important issue is getting the balance right between the entrepreneurship of partners and the fact that we need to have a consistent brand.”
Many of the things that we do as a business will have started through a conversation with a partner.
Perkins is keen to point out that, while the Specsavers growth story is based on the founders’ entrepreneurial spirit, the relationship with its partners is a two-way collaboration, with ideas flowing in both directions. “Many of the things that we do as a business will have started through a conversation with a partner or seeing something happening within a store,” Perkins says.
“Then you take that back and try and professionalize it, standardize it and make it more appropriate for the brand — and then you make it accessible to other stores.” Naturally, a certain amount of healthy tension is inherent in such a model.
“There are things that can on occasion hinder the entrepreneurial spirit,” Perkins admits. “So if you’re a partner in a given place and you’re thinking, ‘I’d really like to do this,’ we might have to ensure that it is consistent with the brand. It was probably fine 15 years ago, when we didn’t have a brand and we weren’t spending £100m (US$160m) on advertising every year, but now …”
As Perkins points out, Specsavers is now a very different beast, at least in terms of scale, thanks to its phenomenal growth, which has been almost entirely organic. Naturally, Specsavers’ growth curve has flattened a little in the UK, reflecting its market share and presence on the high street.
As a result, Perkins is optimistic about the growth potential in the company’s other markets, where share has yet to reach UK levels. “Certainly that’s true in terms of Australia, New Zealand, across the Nordic region and the Netherlands as well, because we haven’t got to the level of share that we’ve got within the UK,” Perkins says.
“So looking at those markets, growth is not exactly easy, but there are far more customers who aren’t already ours. It’s fair to say that we are consistently seeing double-digit-plus growth within developing markets, while the UK is probably 7%, so it’s still growing.”
All of which will no doubt please Doug Perkins, the man who started it all — and whom Perkins credits as his business idol. Among the many lessons passed on from father to son, Perkins says his father exemplified a critical characteristic of entrepreneurs who deliver sustained growth and success: recognizing his limits.
“Doug’s vision was really important,” Perkins says, “not only in terms of the initial idea, but also realizing that he had got as far as he could on his own, and deciding: ‘I now need to proceed with some other people and get them to help me take it on to the next level.’” Those managers are now largely recruited from the big beasts of retail, meaning the transition to working in what remains a family business can often be somewhat surprising.
We’ve got people who come in from Boots, or Vodafone, or Unilever, and they ask us to describe what the key differences are,” Perkins says. “I think the speed of decision-making is the main thing they’re impressed by. In this business, you can be around the table and make a decision, and there’s no one else to go and seek further permission from. You just act.”
Example of sustainable growth
The other big difference is the freedom to take a longer-term view of business strategy. Liberated from the need to satisfy shareholders’ quarterly demands, Specsavers has become a poster child for steady, sustainable and organic growth, leveraging its success in the UK into international expansion and has now established a presence in 10 more countries.
So what next? For a business that has seen growth as the lifeblood for 30 years and now enjoys such a healthy market share, how can Specsavers continue to grow? Part of the answer lies in its acquisition of a domiciliary business providing eye tests for those unable to leave their house.
We focus on the input and the rest just takes care of itself.
Although it is only a small part of the company’s route to further growth, Perkins hopes this complementary business won’t cannibalize the existing share and will fit comfortably into the next generation of decentralized health provision championed by central government.
Is there more growth to come? Perkins is philosophical. “We’re probably a bit odd as a business because our focus is all on the input side of the equation, which means developing our people, helping and supporting our customers to get brilliant value, and working with our partners,” he says.
“The other side of the equation is the growth and the number of stores. So we focus on the input, and the rest just takes care of itself.”