Visiting Edinburgh recently, the first thing Cath Kidston chief executive Kenny Wilson saw on leaving the airport building was a taxi covered in the firm’s branding. And he laughs as he recalls contacting the office to find out if it had been “stage-managed”, waiting for him all day with the meter running.
“I have, in my career, been in situations where we’ve bought advertising when we knew the chief executive was arriving – but this was pure luck,” Aberdeen-born Wilson says of the incident.
He was in town to visit the retailer’s recently opened Princes Street branch, which replaces a smaller shop on George Street that is to close at the end of January. The move is part of a broader push by the London-based business to relocate stores in certain key UK cities to leverage greater footfall.
Wilson says Cath Kidston opened in the Scottish capital more than a decade ago, as one of the first cities its eponymous founder wanted to target outside London, after originally launching with one “tiny” shop near Holland Park in 1993.
It started out selling car-boot finds and vintage fabric and is now a global operation with about 220 stores offering its distinctive bags as well as a range of items from dresses to crockery and even board games.
Wilson says: “The company’s grown up to a size now where we actually felt it was time to move on to Princes Street. It just opens the brand up to a whole load of extra customers – that’s why we did it.”
The new store is already taking four times more than its George Street counterpart, and as well as targeting domestic customers, a key focus is Edinburgh’s tourists – the number of which grew by more than 500,000 from 2010 to 3.85 million in 2015, with plans to increase this by a third by 2020.
Including the firm’s outlets in Glasgow and Aberdeen, its headcount amounts to 75, but there are no plans to expand in Scotland at the moment, Wilson says. “We’re not looking to radically increase the number of stores we’ve got in the UK right now.”
The focus instead is overseas, as domestic economic growth and consumer spend remain sluggish. PwC expects factors such as Brexit-related uncertainty and slower consumer spending to decelerate UK GDP growth to about 1.4 per cent in 2018. The Scottish Fiscal Commission expects the economy north of the Border to grow at less than 1 per cent a year until 2022.
“You see everywhere across the UK that the economy’s difficult right now,” Wilson says. “I think people will tighten their belts, and I think we’re seeing it already. The challenge, then, for any business is to say, ‘How do you make people buy what you’re offering?’”
One advantage for the Cath Kidston business is that it operates in the “affordable luxury” market segment notoriously sheltered from tough economic conditions as consumers rein in big-ticket purchases but still look to treat themselves. Being “aspirational but affordable” was “exactly the premise of the business when it was started, and that’s what we’ve tried to keep up”, Wilson says. “We want to make sure that anyone can buy into the brand that wants to.”
The company has also been altering its product range. “I wouldn’t say that we’re moving away from the classic Cath Kidston 12-colour print. What I’d say is that we’re adding in things that are a bit more subtle and a bit more toned down alongside them.”
The brand has been working to make the shops appealing destinations, as high-street retailers face a drop in passing trade. One study found that UK high street footfall fell by 2.2 per cent between 2008 and 2015.
Wilson acknowledges the “cold, hard reality” that consumer goods firms worldwide are seeing an increase in online retail, which comprises about a third of Cath Kidston’s sales.
And with its customers buying both on- and offline, the company is increasingly asking how many stores it needs per country.
However, Wilson also highlights online retailers such as Boden reversing the trend and unveiling plans to open bricks-and-mortar stores. Boden makes a sizeable chunk of its sales in the US, and the country is the second-biggest market online for Cath Kidston. All in all, the latter’s global store network includes a widespread presence in Asia, with Japan its second-largest market after the UK, as well as outlets in the Middle East, and it opened in India in 2016. It recently launched in Mexico and is set to debut in Argentina in the spring.
But the US is currently without a Cath Kidston store, a topic Wilson says he is asked about frequently. “We’ll go into America when we’re ready and we can do it properly,” he says.
He takes a measured attitude to overseas growth, having learnt in his career to avoid “planting a flag somewhere just to say you’ve got a shop but you don’t really have any presence”.
Nonetheless, he is convinced the brand will work in America, but knows that it is a large and complex market. “I don’t want to underestimate how much time, energy and effort it’s going to take for the company [to open stores there] and I want to make sure that when we do it, we do it well.”
The firm’s international retail sales grew by about a fifth to £42.3 million for the 12 months to 26 March. Worldwide network sales amounted to £129.2m, up by about 8 per cent.
A mix of global locations is because “diversification helps”, says Wilson, who spent about two decades with Levi Strauss Europe, Middle East and Africa, discovering during that time that there is never a moment when all of a firm’s locations see their economies soaring.
Wilson was a schoolboy signing for Aberdeen FC when Sir Alex Ferguson was manager, but his contract was ended by the club. He studied English at university, but during his degree decided that the world of business could provide him with some of the aspects he liked about the beautiful game, such as teamwork.
Harbouring an interest in fashion and retail, he signed up to a graduate training scheme with K Shoes. He also brushed up on his numeracy, saying: “I could see quite early on in business you need to understand a bit about numbers, so I did a graduate conversion course in finance.”
After his long spell with Levi Strauss, he became European president for Claire’s Accessories, in a bid to experience a business backed by private equity (“and I learnt a lot of stuff by doing that”). The firm had been acquired by New York-based Apollo Management in a deal worth $3.1 billion (£2.3bn). Claire’s was seeking to expand its network in Europe, and in his three years there, “we went from 800 stores to 1,200”.
But it was his time at Levi Strauss that led to his current role, starting in 2011 after being approached by his former boss at the jeans company. “He phoned me up and said, ‘I’ve taken on the chairmanship of Cath Kidston and we think you could really help us expand it’.”
Wilson met Kidston herself and TA Associates, the private equity firm that bought a majority stake in the business in 2010 in a deal valuing it at about £100m. Ownership later transferred to private equity firm Baring Asia. Examining the Cath Kidston company, he perceived it to be a “predominantly south of England business, and I just felt there was a ton of opportunity for growth, both within the UK and outside”.
When he joined, the aim was for Cath Kidston to move from being a British brand “to being a British brand that was known globally. I don’t know in my tenure here as CEO how far down the line I’ll get of making Cath Kidston a truly global brand, but it’s more than double the size it was when I showed up. I think it’s got the potential to double again and probably double again under someone else’s leadership.
“I’m a long way from wanting to retire right now – but I want to hand the thing over in better shape than I got it.”