Sussex Beds, which turned 40 last month, is one of the UK’s most successful independent retailers. Currently in the early stages of a 10-year expansion plan, the 12-store chain (a 13th will open in Dover this month) has its sights set on controlled, measured expansion, CEO Steve Pickering tells Paul Farley. And the best is yet to come …
It was December 2020 when I first heard about Steve Pickering’s BHAG (Big, Hairy, Audacious Goal), but at that stage I had no idea quite how big, hairy and audacious it truly was.
When the opportunity came for a long-overdue check-in with Steve at his new(ish) office, I jumped at the chance to find out more about his rapidly expanding business. Conveniently situated in my hometown, Hastings – in the former HQ of our local newspaper, where I’d last set foot during a work experience stint in 1996 – Sussex Beds is, like many local independent retailers, something of an institution in these parts.
With a history dating back as far as I do (to 1981), the Pickering family’s bed shops have been the destination of choice for many of the county’s consumers in need of new shuteye solutions, and its liveried delivery vehicles are a common sight down here on the UK’s Sunshine Coast.
Yet clearly the secret’s out. With the opening of stores in Tunbridge Wells, Tonbridge, Ashford, Maidstone and Canterbury – and, this month, Dover – Sussex Beds is increasingly overstepping its brand’s boundaries. With a modest calmness that belies the sheer scale of his ambitions, Steve reveals that these forays into neighbouring Kent are just the beginning.
“For the next three years, we plan to open a store every quarter,” he says.
By my count, that’s 11 more locations, totalling – if, like Steve, you count the website as a store equivalent – 25 by ‘25.
“I don’t see such expansion as a risk,” he continues. “The finance is in place, and we have a very strong business model.”
But that’s just the start.
“That’s the slower bit,” Steve continues, flashing a wry smile. “The objective then is to prepare for faster growth thereafter, hitting 80 stores by 2030.”
That statement takes a while to settle in. After seeing so many retailers downsize/rationalise their store estates over the years, it’s quite a shock to hear directly from an independent retailer (and a local one, to boot) that’s planning quite the opposite.
Waking up
To appreciate the credibility of Steve’s ambition, one must first understand his back story. Founded by Steve’s parents John and Sandra in 1981, Hastings Bed Centre was joined by stores in Haywards Heath, Bexhill, Uckfield, Portslade, Hailsham and Newhaven over the following three decades.
This expansion came to an end in 2012, when the realisation hit the Pickerings that the business was unsustainable. Sussex Beds was overstretched and underperforming, and its principals made the difficult decision to place it into a CVA, hitting a hard restart on proceedings in the name of long-term survival. Full administration followed.
“There was just so little knowledge of what was going on behind the business,” Steve recalls. “Retail isn’t just about product, but a whole host of structures and controls – finance, HR, KPIs … and we were well out of our depth.”
In hindsight, it’s fortuitous that the family chose rip off the plaster when it did.
“The challenge certainly spurred our thought processes in new directions,” says Steve, who, together with the current management team’s John Rayment (operations director), Matthew Pickering (financial director) and Sue Skinner (sales and buying director) – all of whom had joined before 1995 – took the reins of the downscaled six-store business in 2014.
Reinvention was driven by frequent meetings in which Steve’s team were forced to question the very fundamentals of their operation. These were led by a local business coach, who continues to play an important role in mediating and counselling the team’s decisions.
“We met up every two weeks, and always came out of each meeting with actions to be implemented,” says Steve. “It was – and continues to be – extremely productive. It’s given us structure. We were salespeople – now we’re businesspeople. We strategise, we spread the risk, we study the numbers.”
Steve was determined to empower himself and his staff through knowledge, and to avoid repeating the mistakes which led to the company’s capitulation in 2012. “As long as you learn from your experiences – and you take much more from your failures than your successes – you can only get better,” he explains, recounting an experience in the newco’s early days when he made the decision to outsource the installation of the stores’ fittings: “The job just wasn’t up to scratch. Whereas before we might have asked for improvements and let the installer roll out the rest, we chose to do it all ourselves instead, and get it right.
“Over the years, one voice of conscience – our coach – has turned Sussex Beds into a DIY business.”
The subsequent turnaround saw Sussex Beds awarded various accolades, including the NBF’s Bed Retailer of the Year (under £5m beds turnover) award in 2016. More store openings across the region followed.
Like many businesses, the pandemic proved both cuff and catalyst for Sussex Beds, which in its 2020/21 FY turned a record-breaking profit, opened four new stores and a second distribution hub, and invested significantly in its staff and digital operation – an inspiring effort which earned the business its second Bed Industry Award, this time the Retail Champion of the Year accolade, in 2021.
Although it hurt at the time, the decision to rebuild from the ground up following the administration proved crucial, giving Steve’s team the opportunity to get to grips with the new rules of retail – both in-store and online – before the market became (arguably) more unforgiving.
Bye bye, brands
“I was walking the floor of our Bexhill store in 2015,” Steve recounts, “when a customer selected a mattress from a well-known UK brand. It was priced at £500. ‘Can we do a deal?’ asked the customer. ‘OK’, I relented, ‘£450?’. ‘But Argos has one for £199,’ he replied.
“In that scenario, you can explain that the cheaper model they’re comparing yours against is far inferior, and that your services count for a lot. But, right away, you’re fighting the customer. Why were we allowing ourselves to be a showroom for our online and catalogue competitors?
“That was the moment I decided to move away from selling branded beds.”
The value – or lack thereof – in brands in the furniture industry is a recurring conversation, but it’s rare to see a retailer that has taken their conviction to such extremes. Today, Sussex Beds is a completely white-label business, and is in the process of building its own brands rather than relying on the sector’s established players.
“We always felt like we needed brands to compete locally and add credibility,” says Steve, “but no brands means no price comparisons. They don’t tend to advertise significantly, or add value. Today, Sussex Beds is the brand.”
Steve’s own brands include the higher-end Harrington & Abbott, and Nectus, which targets a younger audience. “If it’s of a standard that meets your purpose, why not have the confidence to put your name on it? Present it to the customer, who can then make an informed choice about whether or not it’s right for them, and it works,” says Steve.
This approach also grants Sussex Beds far greater control of its pricing and margins. Having made another conscious decision to move away from the volume market and next-day deliveries, Steve believes the battle will be won by “great product and honest values” – but admits that this sometimes means turning customers away.
“You can’t work to everyone’s budget, but when/if they do want something good, they know where to come,” says Steve. “It sometimes goes against your instincts as a salesperson – you want all the money you can get! – but doing away with your own margins just isn’t sustainable.”
Accordingly, Sussex Beds’ AOV has undergone a remarkable shift over the years, going from £450 five years ago, to £750 in 2019, to £1050 in its most recent quarter.
In the BHAG
It takes skill and confidence to sell profitably, and Sussex Beds takes great care to train its sales staff to a codified standard. Post 2020 lockdown, a new commission structure was introduced which rewards higher AOV delivery with greater proportions of the profit.
“Before we put that into place, we might have seen a salesperson make one £5000-plus order each month,” says Steve. “Now they’re making 3-4.”
Still presenting a ‘good, better, best’ range of floor models in each line, Sussex Beds’ strategy is to start the pitch at the top, giving the customer a taste of the best of the bunch, regardless of any budgetary expectations they might have. “A lot of people want something nice, and, generally, where you start is where you end up,” Steve says.
“People are more appreciative of a good night’s sleep these days, and are willing to invest in it. Thanks to the likes of the NBF (and even the bed-in-a-box brands), they’re also better educated and have a different perception of how much it should cost.”
Although the stores account for the vast majority of Sussex Beds’ transactions, its online business is booming, up some +400% over the past 18 months (albeit from a low base). The website also fulfils a vital marketing role, with more than two thirds of the retailer’s customers (68%) visiting it before going in-store.
“The website feeds our stores, but selling is ultimately about connection,” says Steve, “which is why I’m so committed to bricks-and-mortar expansion. Around 20% of our business is repeat custom, or referrals, and it may take a few years before customer loyalty pays off – but pay off it does.”
Sussex Beds markets itself hard through a range of channels, including digital marketing, direct mail, radio, press and social media. “All our receipts have vouchers offering rewards for referrals,” Steve adds. “It’s far cheaper to market to and via existing customers than to reach new ones!” Early forays into TV advertising have also proved successful to date, he notes.
The retailer’s in-house marketing has fallen into a steady rhythm over the past two years, driving business through compelling product offers and a myriad of additional services and incentives – from discounts for trading in old beds for recycling, to a 0% finance model and 30-night trial (with the purchase of a mattress protector). As well as reinforcing the NBF’s values, the messaging covers almost every conceivable reason to buy, while establishing those all-important pricing expectations.
“The trade can get a bit self-righteous about discounting, but consumers do buy into it – every one of us likes to think we’re getting an offer,” says Steve. “Take Black Friday – it’s now bigger for us than January. Historically, sales dropped before Christmas, then the weather would put people off going out to the shops – what a great time to have such a big sales opportunity!
“Yes, new sales spikes might detract from others, but sales are becoming much more consistent across the year than they used to be, which is great. Why fight it?”
Gaining Traction
At the heart of Sussex Beds’ recovery – and key to its successful expansion – is attention to detail. The whiteboards and flip charts around Steve’s office betray a management style steeped in aims, goals and KPIs, while outside the retailer’s mission statement fills the wall: ‘Great products, great service, for a great night’s sleep.’ But what exactly does it all mean?
Fundamentally, says Steve, the business is concerned with helping people sleep better: “Do you know what would be really powerful? Having a number so you can gauge exactly how many people we’re helping to achieve that each year …”
But he acknowledges there’s a lot to unpack from that statement – and that was just one of the goals of a recent four-day management retreat, while thrashing out some of the BHAG’s finer details.
“Ahead of us is a path to 80 stores,” says Steve, “but if we’re even going to reach 40, we need to continually stretch our thought processes and ask ourselves why and how we’re going to achieve those milestones. Our mission statement really does mean something to our team. It has to – it’s important we all believe in what we’re doing and where we’re going.”
Building on the teachings of the aforementioned business coach, frameworks such as those laid down in Gino Wickman’s bestseller Traction have empowered Steve’s team to build additional checks and balances into his fast-expanding business, while nurturing ambition.
“The trouble with a lot of retailers – and we were in this camp – is that they don’t know their numbers. How many people are coming into your stores (and returning), what are they converting, and what’s the AOV, revenue and gross profit?
“A business’ overall performance is the result of each of these metrics, and more. Every department needs to be accountable, and when it comes to the numbers, you have to take a detached view. You need to know what’s going on each day, not just at the end of each month or year. It’s the only way to control a business. If you don’t have a grasp of all these aspects, how can you make it better?
“The bigger you get, the more rules come into play,” says Steve. “But if you’ve got the knowledge and the right people, you can achieve anything.”
Steve’s jobs
The first lockdown placed extraordinary pressure on every ‘non-essential’ retailer, but Steve’s team spent their time wisely, working on store refurbs and migrating sales and product training courses online. Lines of communication were streamlined, ensuring team members would not lose touch with one another, and knew where to turn if support was needed.
The temporary detachment the lockdowns imposed gave Steve some idea of how a scaled-up Sussex Beds might lose some of the values associated with its independent roots, but he’s confident that the brand’s identity will remain intact if the expansion is done right.
“We’re making a £250,000 investment in our IT systems alone this year, which will give us a solid base from which to upscale in a controlled manner,” he says. “If we were to scale straight to 40, 60, 80 stores right now, we’d implode – so we need to make sure all our processes can handle our ambitions.”
Steve says that although there is still some further local potential, the expansion will inevitably take Sussex Beds beyond its current Sussex and Kent territories into Hampshire, Surrey and beyond – all counties with a customer demographic in line with the business’ existing audience. He envisions some new stores, some takeovers, and perhaps even a couple of destinations driven solely by his in-house brands.
The scale of the ambition is remarkable – but, having heard all sides of the story, it seems to me that in Sussex Beds’ combination of unique product, processes and people, there’s a recipe for success to rival even the nation’s biggest multiples.
“I’m building something I’m proud of, that people enjoy working in and are proud to work for,” says Steve, looking across the office to his wife Paula, son Josh, daughter Grace and other close friends in the company, all of whom have proved their abilities and are passionate about taking this regional operation to a whole new level. “The only thing that could stop us is ourselves.”
This interview was published in the February 2022 issue of Furniture News (see related).
