By Claire Ferris-Lay
How Sir Paul Smith fashioned a $500m retail empire
Most businessmen arriving in Dubai at 4.30am with a busy day of meetings looming ahead usually head straight for their hotel to catch up on a few hours sleep. Not Sir Paul Smith. Instead the British designer asked his driver to show him the sights, minus the glamorous hotels and skyscrapers.
“We went to the Creek, the fish market, the food market and the gold area and I took maybe 30 photographs. There was this picture of these lovely pieces of wood with green ends — it was a geometric sort of picture — which might turn into the lining of a suit,” he says.
“Actually maybe that’s why I’m so tired,” he grins.
Smith’s trip around old Dubai is typical of the designer, who is as renowned for his passion for photography and collecting things as he is his distinctive designs. For the last 20 years the fashion designer has been sent hundreds of mystery parcels by people from all around the world, the result of which is the jam-packed office he is often pictured in.
In addition to shelves and shelves of books, Smith’s London office houses everything from second-hand clothing (he regularly trawls flea markets in London and Los Angeles) to shoes, accessories and furniture. But it is this zany approach to design and life in general that has stood Smith in good stead ever since he first established his business some 40 years ago.
Today, Nottingham-born Smith not only designs twelve fashion collections a year for 94 stores and stockists in 35 countries, he also shoots his own advertising campaigns, personally dresses and decides what each model will wear in his shows, and takes care of the business side of his eponymous brand.
How does he fit it all in? “Probably the most difficult aspect of my particular work is how many hats I wear in one day,” he tells Arabian Business.
“I don’t know how but somehow or another over the years I’ve worked out how to get the balance right.
“I often get asked questions about business plans or five-year plans and things like business opportunities [but] it was only about eleven years ago we started having meetings,” he laughs. “It’s too disrespectable to say it just flops along but it’s just you do that and you do this. I suppose I’m just an observer of stuff, of life, and the trade,” he adds.
In January, the Sunday Times newspaper ranked Smith 26th in its annual list of the UK’s richest individuals with an estimated fortune of £250m ($393.87m). His stores — which stretch as far and wide as Dubai, New York, Bangalore and Moscow — are part of a business worth an estimated £300m ($472.65m). But money, he says, he is the least of his motivations. “It’s the love of life,” he says simply.
“I’m not aspiring for an additional home or a private yacht; I’m fine as I am,” he says when questioned about the possibility of ever selling out to a big fashion conglomerate. “Whenever we’ve earned some money, we’ve just put it back in the business so selling out — what’s the point, what can they offer?”
“In the 1990s when there was that big acquisition fever, we were offered lots of deals by people,” he adds. “I arranged to meet the people with some of the younger staff and asked them ‘what do you think?’ afterwards and they said ‘we know as much as they do.’”
Is it rather pointless talking about acquisitions with Smith. Within two minutes of meeting him it is more than apparent that he is as passionate about being involved in his company today as he was when he first started and would never have any intention of giving it all up.
But it wasn’t always this way. If Smith had got his own way as a young 20-something year old man he would have pursued a career as a professional racing cyclist. But an accident, which saw him hospitalised for several months, put an end to his cycling dreams and kick-started his love affair with design.
“I ended up meeting some people I had met in the hospital and by chance one of them chose this place to meet, which was a pub in my home town of Nottingham. Slowly after going there two or three times I realised it was full of all these young people who were talking about these interesting things that I had never really heard about — graphic design, architecture, photography and fashion design — and it was so exciting,” he explains.
“[I thought] maybe I can even earn money doing this. How cool is that that you could earn money doing something so creative?”
And so began his career in fashion. Smith started running a boutique before pouring all of his savings, £600, into his own shop. At the same time he met his now wife, Pauline Denyer, then a fashion lecturer at university, who helped design the clothes and taught Smith the fundamentals of fashion design.
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For years Smith couldn’t afford to buy the fabric he wanted so he made do with what he had and accessorising in ways he knew how; a polka dot piece of fabric on the inside of a suit pocket or a red button hole on a navy suit. Today, those quirky details and his reworked English classicism have become synonymous with the Paul Smith name.
It is only in more recent years that the “Paul Smith stripe” was created, he explains. “I [eventually] got to a point where I could design fabric myself and I was bored with navy and white stripe and burgundy and white stripe that I thought ‘why don’t we put as many colours in as we can and see what it looks like?’”
“I showed the collection and it sold really well as a shirt. Then the next season my customers came back and it wasn’t there because I had only done it for the spring season. They all said ‘where’s that stripe from before?’ and I said ‘it’s only for one season’. Twenty years later it’s still there,” he laughs.
In addition to the trademark design touches on his men’s and womenswear collection, Smith has also turned his hand to the lucrative world of accessories with licensing and limited edition deals with everything from Evian water to Cross pens, Barneys New York, luggage and furniture.
In fact, it is these accessory collections that Smith cites as one of the main reasons his business has continued to grow year-on-year in spite of the economic downturn. “Accessories are today very important because as you know the financial situation in the world is quite frightening right now,” he says.
“A lot of countries are in a bad way so to buy a suit costs quite a lot of money but to buy a tie or a scarf or a hat to cheer up a pair of socks is a lot less expensive so accessories have never been so important.”
Accessories are, however, just a part of the reason behind Smith’s success. His brand’s appeal to a wide range of men and women of all ages has also enabled it to grow its business at a time when many other brands have seen sales plummet.
“When I’m putting my clothes and collections together they’ll be a t-shirt that appeals to a fourteen-year or they’ll be a cashmere and wool suit, which the boss of the Bank of England will wear, or a leather jacket that a rock star could wear. So the appeal of Paul Smith is really wide and that’s another reason during a recession that we’ve not really been worried because there is always someone out there with some money and they like Paul Smith,” he says. Smith might not like being referred to as a businessman but his renowned dislike of debt has also been a significant factor in his ability to continue making money. Smith owns several of his firm’s warehouses including a £10m ($15.75m) distribution site in Nottingham as well as his London-based office and offices in Milan and New York, meaning his business “doesn’t have any borrowings”.
Then there is Smith’s Japanese business, which he established back in the early 1980s. He jokes that while other international designers were complaining of the jet lag during their visits to Japan, he simply loved the opportunity to visit “this place called Japan” — even if it was via Anchorage, Alaska in economy class.
Twenty years later, the Japanese can’t seem to get enough of his designs and his 200 shops in the country are the most profitable part of the overall business.
A recent documentary, Paul Smith — Gentlemen Designer, by the French filmmaker, Stephane Carrel shows Japanese fans screaming and posing for pictures during a recent visit.
“I put the effort in because in the early days I was so excited about it and then because it started to do so well I kept it going. I had 39 staff out there last week and I came from there this morning. It’s been good for both of us; I’m one of the most successful European designers in Japan,” he says.
In 2006, Smith sold a 40 percent stake in his Japanese business to its licensee, Itochu (“My financial director and Pauline wanted to get some money to give to the grandchildren”) but Smith sees a huge amount of potential to grow his business in Asia. “Korea has stated to do really well, which is in a way a copycat of Japan,” he says.
“We’re doing quite well so far here [in the Middle East]. I think it definitely can grow quite a lot here and certainly our partners here [Chalhoub] are really positive about Paul Smith and in a way it’s the next step really. I’m not one of the big brands in the shopping malls; there is the posh street and I’m on the next street… I’m happy to be on the cusp.”
Well, it’s a method that’s worked well for Smith so far.