Fopp has finger firmly on public's musical pulse

He grins. "Actually, I just got offered David Sneddon [his album] at 1.25. No thanks, I said. He’ll have to go down to 50p and even then I’ll probably have to give him away. You need decent volumes at those margins to get the economies of scale. Big volumes for David Sneddon? No bloody chance."

In an empty, white room above Fopp’s Union Street store in Glasgow, Montgomery is musing over the latest offers from CD wholesalers across Europe. The industry is falling over itself to do business with Britain’s fastest growing discount music chain, just as publishing houses are delighting in the vast quantities of literature - think Gabriel Garcia Marquez at 3 - that Fopp is effortlessly shifting. The DVD wholesale market is another fan.

"Tommy Cooper?" Montgomery frowns. "Doesn’t sell in July, but we’ll stock him in December - great Christmas present for dads. David Beckham and Roy Keane - I can’t sell ’em at all. You see Beckham on the pitch and think what an artist, but who wants to read his book?

"Michael Jackson? Got to be careful there. We’re taking 500 at a time. The moment he’s seen as guilty, he’ll never sell again. But there’s other things I can’t get hold of. I wanted to bundle the Koran and the Bible for Christmas, but I couldn’t get a decent New Testament from the people in the church and God business. I suppose God doesn’t want us to sell him at a discount." He chuckles, apologising for any disrespect.

Yet to turn 50, Montgomery started Fopp in 1981 on a stall in De’Courcey’s Arcade, in the west end of Glasgow. Disgruntled with Virgin - he set up their first Megastore in Scotland - he took 3,000 in severance pay and arranged a 3,000 overdraft to begin building a business that racked up sales of about 30 million last year, up 60 per cent on 2002.

The first 18 years were a slow grind - "It took me three years just to get a shop." But a day came in 1999 that set Fopp on a ballistic expansion course. Today it has 14 stores stretching from Covent Garden to Dundee, with plans for 25 outlets in the next two to three years.

"The day arrived," says Montgomery, "that I thought, ‘look, I keep borrowing half a million a year from the bank, and if I keep on like that I’m never going to get anywhere’. We had a strong relationship with Bank of Scotland - we’d paid our dues and been a solid customer. So I asked them a straight question: ‘what’s the maximum I can borrow?’

"When I started out, banks took a different view of risk capital, but nowadays they’ll take a calculated chance. They said I could take 2 million. The only condition was that I gave up sole ownership, so I gifted away 40 per cent of the shares. It made sense because I needed the extra people to expand the company. We incorporated on 1 December, 1999."

Cue an expansion drive that has seen a second, two-floor store launched in Edinburgh, with Fopp’s first dedicated bookshop, in Cardiff, due to open in March. "If it works, we’ll roll out Fopp Books as a chain," Montgomery says.

He sees two barriers to Fopp’s continued growth. First is finding good locations in towns that fit its strategy, targeting areas with universities and a population over 100,000. Second is making sure the quality of the "Fopp buying experience" isn’t sacrificed at the altar of rapid expansion.

"We’ve been approached by people from the stock market who want us to float, and by venture capital companies who want to buy. But I’ve always turned them down. They’d want to expand too quickly. All of our directors and shop managers have come from the shop floor and they wouldn’t like it. It would hurt the quality.

"The other problem [with VCs or IPO-makers] is they need to see an exit route for me, and currently I don’t have one. It’s terrible I know, but someone’s got to be the guardian of the business. I didn’t spend 22 years just to lose control of it, or sacrifice its quality. Right now, the board has full control to do whatever we see fit. We’ve got a three-year plan and it suits us fine."

But it’s here that Montgomery exposes the biggest question mark over Fopp’s future: it is difficult to see the business prospering without him. He insists that after six or nine months of hard mistakes the other directors would carry on as usual. But it would be a big gamble.

Montgomery’s greatest strength, by his own verdict, is his knowledge of what to buy, when and at what price. Some of that can be imparted to others. But not all.

"I’ve been buying since I was 16, in the days when we still had push-button tills," he says, waving wildly as he pretends to punch the numbers on a register. "I remember inflation in the 70s, and what it did to the seven-inch single when it went from 49p to 50p. I remember the first computer we brought in to the store on Renfrew Street, in the 80s, well ahead of the competition.

"In the 90s we connected all the stores’ computers so we could sit and watch all the numbers coming in, every night, on what was selling. Nowadays we know the details on every single product line we sell [there are at least 20,000 per store]. We study the data, we produce reports, we rank everything and we zone the shop space based on the margins. Retail is a science, not a guessing game."

In 2003, Montgomery says, he made a concerted effort to pass his wisdom on to one of his buying team. "But he still hasn’t quite learned that it’s not what you buy, it’s what you don’t buy. You can still buy Jive Bunny, but it’s no use to me or my customers. We don’t want to put shit in their record collections."

Montgomery’s eye for the future, presumably, is another thing not easily replaced. When he wanted to move into DVDs, he says, there was internal resistance. The margins were poor. Montgomery persisted, and DVDs today are the fastest growing area of Fopp’s income. "Thank God we got in to the market," he says.

Now he’s looking at Brazilian pop, and minimalism, as future trends in music. "There’ll be a minimalism campaign that includes the first four influential albums by Can. I had to go as far as the keyboard player’s wife to find the right deal, but I got it."

Montgomery says he sees himself "more and more stepping back a bit from Fopp". The big danger, he claims, is not to the company, but to retailers in other markets. "I can see myself in another area of retail. I think all the time, should I start another business? My skills are in retail generally, not just music.

"The way I look at ‘product’ is completely different to anyone else in the industry. HMV say: ‘We’re going to buy this at that price, and put it in that store there.’ My attention to detail, and the speed I make sure we work, is totally different.

"With a bit of attention to detail, we’d probably wipe the floor with some of the competition in other areas of retail. We’ve got the track record. If the sums add up, we’d be prepared to risk a bit and I’m sure the bank would too."

Fopp Interiors? Fopp Fashion? "It doesn’t matter what kind of retail it is," Mongtomery says, "I’m starting to look this year."

30-SECOND CV

Who’s in the family? My second wife, Clare, who’s in her thirties. Two boys from my first marriage, 21 and 16.

What car do you drive? A Volvo estate, an ex-demonstrator with 3,000 off.

What would be your desert island disc? Impossible. It’s different records for different moods.

But I can tell you my favourite song for the last couple of years, and that’s Tony Bennett singing Wave. I think he’s a better singer than Sinatra.

What is your greatest business strength? Buying.

And your greatest business weakness? I focus too much on buying and I don’t see other roles that people perform in the business from their perspective, so I seem impatient.

How much would you spend on a bottle of wine? As little as possible. I like value for money, but I’d go beyond a tenner.