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Interview with Fashion Mogul Sir Philip Green
Aired June 21, 2013 - 05:30:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MONITA RAJPAL, HOST (voice-over): It is opening day for the fashion chain Topshop in Hong Kong. Eager shoppers line the street ready to get their hands on British High Street fashion. The Brand is just one of nine names under the umbrella of the Arcadia Group, a fashion empire owned by Sir Philip Green and his wife that last year turned out $4 billion in annual sales.
A veteran entrepreneur, Green had already bought and sold several department stores and retail companies by the time he attracted the public's attention. His $13.9 billion hostile bid for Marks & Spencer's in 1999 saw his name printed in headlines around the country, but was eventually (INAUDIBLE).
Instead, he and his wife took over and turned around the ailing retailer, British Home Stores, and then snapped up the Arcadia Group, the parent company of High Street fashion darlings like Miss Selfridge, Dorothy Perkins, and, of course, Topshop.
In 2010, his Topshop stores became the target of protesters who accused Green and other big businesses of tax avoidance. Green dismissed their claims, saying he has always paid whatever tax was due.
This week on TALK ASIA, we're with Sir Philip Green to find out which regions he wants to conquer next, and discover why Hong Kong played such a pivotal role in kick-starting his career.
RAJPAL: Philip Green, welcome to TALK ASIA.
SIR PHILIP GREEN, CEO, ARCADIA GROUP: Good afternoon.
RAJPAL: Thank you so much for spending a few minutes of your time with us. We're in Hong Kong in your store here that you're about to open. Hong Kong, interestingly enough, has had quite an influence on you, going back to when you were 23 years old. Tell me about the influence this city has had?
GREEN: Actually, I just went to visit the tailor I made my first shirt with. And he was still in the same shop.
RAJPAL: How has the city changed?
GREEN: Oh, I mean, it must be five times, 10 times the amount of real estate. I mean, in those days there was, you know, not a lot. And China wasn't what China now is. So I think, you know, it was Hong Kong -- principally Hong Kong-made. Because you used to go visit the factories and, I mean, it's a -- the landscape has changed beyond any sort of measure.
RAJPAL: You knew back then, at the age of 23, that Hong Kong was where you needed to be, the whole import/export trade.
GREEN: I mean, I think I was fortunate that sort of my first job when I left school was with a footwear company that were the first people that actually were bringing in footwear from Hong Kong, China, Taiwan.
So I was just lucky that I started in with the people actually who were here. And then I decided after five years of training and doing that, I would come here and explore. It was just such a fascinating place.
GREEN: That -- you know, of how things happened, the speed, that I should come and investigate.
RAJPAL: And now 2013, you're here.
GREEN: Just a little while later.
RAJPAL: A little while later. Why was it important for Topshop and for Arcadia to have a presence in.
GREEN: Well, I mean, I think, you know, to state the obvious, I mean, everybody has been talking about China and talking to us about China for a long time. Hong Kong is sort of very, very difficult to find a store, just in terms of price.
RAJPAL: The real estate is.
GREEN: Is crazy.
GREEN: Yes, crazy. And therefore when this opportunity came and we had been exploring China for the last, probably 28 -- you know, couple of years, talking to a lot of lot of people, I felt if we actually had a store that was at least nearby, we would be able to talk to people in a very different way.
So that moment came and we sort of -- you know, the opportunity turned up, I said, let's just go do it. So I think now we're here. Now it's a much easier stepping stone to talk about China.
RAJPAL: Where did your nose for business come from, do you think, the whole mentality?
GREEN: Well, I was always interested in business. My mom was in business -- or my parents were in business. And my father died when I was 12. My mother was in business on her own. And I developed an interest.
RAJPAL: Your parents, they owned businesses such as garages, everything from garages to real estate. What do you remember about the way your mom dealt with business?
GREEN: Well, listen, she is now 94 -- 95 this year. She is still working.
GREEN: Yes. So, no, she was involved in the detail, sort of, you know, wrote everything down, deal with the numbers. And I suppose, you know, you follow, you watch, and you learn.
GREEN: You know, I was lucky.
RAJPAL: Tell me about growing up in Croydon.
GREEN: Well, I wasn't really there. I mean, I was -- I sort of moved from there when I was like three years old. So I was in a very short time.
RAJPAL: And you went to boarding school in Berkshire (ph).
RAJPAL: But then you left at 16, why?
GREEN: I wasn't that good at school.
GREEN: I thought maybe I should go to work, maybe the -- sort of the period of time sort of when I was on holidays and I worked.
GREEN: . and I was learning. I was much more interested in business. Yes, I was never going to be a triple-A scholar.
RAJPAL: What is it about the rag trade that you love?
GREEN: It's an exciting business. I mean, you know, sort of there is good and bad. But it's a fun business. I mean, I've been, you know, lucky, to sort of develop, you know, my career sort of in the way I have. So I've sort of been across virtually every area of the business.
I think that's a little different, you know, having had that opportunity, to be from the production into understanding the making, the importing, you know, even now just for fun sometimes I go to the meetings and I sort of like pick up something.
And I say, you know, that costs X. And they sort of look at me and say, how do you know that? But, you know, it's a feel.
GREEN: And I think it's important. I think the product -- it all starts from great merchandise.
RAJPAL: You talk about the shoe business that you first started out in. What was it like when you had -- when you secured your first deal? How did you feel?
GREEN: It was funny, actually, one day (INAUDIBLE) too long ago. And I got a big order from this -- from a retailer. And the boss I had at the time was a real tough sort of guy. And he said, you never going to get an order from there.
I said, I'll be back at 4:00. And I got back, I ran up the stairs of this building like five, six stories up, and came back. And I think I had sold 20,000 pairs of shoes or something like this.
And in those days they were like three bucks, two bucks, you know, very cheap.
RAJPAL: Yes, yes.
GREEN: Then opened up his wallet, very old-fashioned, but then he gave me 5 pounds.
RAJPAL: That was the bet.
GREEN: Yes. Anyway, about six weeks later, some things happened with the packaging and the box, and just couldn't get it done. And he (INAUDIBLE) called me, asked me for the 5 pounds back.
RAJPAL: But what was that feeling like when you knew you were able to secure something? When someone told you that they could.
GREEN: Listen, I think it's like everything. You want to -- you know, everybody wants to win. I mean, you're crazy if you don't want to win. So I think, you know, whatever you're doing, even now, you know, sort of I used to say, you know, when my kids were much younger, and we used to play ping-pong or whatever.
GREEN: I want to win. You know, and I taught them. There's no chances, I think you either want to win or you don't.
RAJPAL: And what about when you went and made your first million? What was that like for you? Is it ever about the money?
GREEN: No. I think that -- the money is not -- you know, if the naive need to say to you that, you know, the money is fun, it's nice to do, but I think sort of getting it right and hopefully the result of that is you turn it into money, and obviously as my life has developed there is some change.
But I think, you know, I never sort of stopped to think, well, that's -- you know, I just wanted to carry on and hopefully develop, you know, what's next.
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RAJPAL: Is there room for failure in Philip Green's world?
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GREEN: We are back in business now.
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RAJPAL: You've often talked about being a positive thinker. And you're quoted as saying once that life is about taking a view, backing yourself, and taking a risk. Now you would undertake businesses that others will have written off.
People would have said that business is going under, but you would see something and be able to turn it around. What is that?
GREEN: I think it's sort of a bit of gut feel, a bit of confidence, knowing how to go and -- because I've been across most parts of the business, so I can finance -- I understand the real estate, I understand the product, which is somewhat unusual, this ability to multi-task across most of it.
So I sort of got quite a quick feel of whether I think it feels right or wrong.
RAJPAL: Interestingly enough, I think one of the businesses perhaps that would illustrate what we're talking about here is 1985, there was a company that you bought a six-month option on, Jean Genie, for what was 65,000 pounds, that's about $100,000.
GREEN: I actually bought it for $100,000.
GREEN: Sixty-five thousand pounds.
GREEN: And I said to the guy I was buying it from, and I froze the bank for six months, if I managed to turn it, I'll pay you another 435,000. And I actually sold it on the night before my six-month period for 7 million.
RAJPAL: Seven million.
GREEN: Yes. What happened is this, a lot of -- and I don't sort of want this to sound sensible as opposed to -- this is not personal to that guy. A lot of owners, owner-occupiers are blinded by the fact they're actually in trouble.
So when you get inside these companies, you know, it's pretty difficult to suddenly sort of -- you know, when I called this guy to buy the company, he asked me 4 million pounds for it. And I called him back, I said, it's good news and bad news.
You know, the bad news is you're broke. But the good news is I'll still buy it. And I offered him 65,000 pounds for something he asked me 4 million.
Now what -- the other thing I learned sort of along my career is don't ever be embarrassed to offer somebody what you think it's worth.
RAJPAL: Do you take advantage?
GREEN: No, I mean, nobody has -- no, I think -- you know, I didn't turn up with a gun and a hood. So you're going to sell to me, but I feel that a lot of it is in the buying. If you buy well, then you start at the right place. Now I had no idea whether I could turn this business around.
RAJPAL: So why get into it in the first place?
GREEN: Because I thought I could fix it. Luckily enough I found a buyer. Now who knows, you know, how it would have turned out if that buyer doesn't turn up? You don't know, do you? Gut feel.
RAJPAL: It all comes down to the gut feel.
GREEN: Yes. The other thing is, I think, along the journey you have to build your capital. So if you're not buying and selling, how do you build your capital base? So, you know, I think that's sort of part of the business piece.
RAJPAL: Is there room for failure in Philip Green's world?
GREEN: Well, we try not to.
RAJPAL: So if something doesn't necessarily go according to plan, you look at it as a way -- something to fix, because you like fixing things.
GREEN: Well, I think it's about how do we respond -- do people actually realize they've got it wrong? Are we on top of it. Are we looking at the right thing. And I would like to think sort of the same people sort of -- you know, they don't want to come and tell you, they've got it wrong. But I think provided we're on top of the right data, if we have it wrong, we're going to fix it.
RAJPAL: What was the decision or the thinking process -- the thought process when it came to selling 25 percent of Topshop and Topman to Leonard Green & Partners, they're the same people that own J. Crew in the United States.
GREEN: Yes. They've been very, very -- probably one of the most successful retail owners in America. America is not easy. I think sort of some of the toughest discussions about even finding one's -- one location is break-your-head stuff.
And I felt that they could possibly be, you know, very helpful in enabling us to develop America. It wasn't for monetary reasons. And I think they know the market. They're very nice people. They've been doing this for a long, long time.
So I felt they could help us develop our business. That was the thought process.
RAJPAL: How much do you want to expand in terms of Topshop? Where do you want to be?
GREEN: Well, I think, you know, this is now our 39th territory, Hong Kong. So I think, you know, we've got lots more to do. But obviously America is a huge market. And we're only four stores in. Nordstrom, we've all but agreed.
RAJPAL: And these are concession stores -- these are concession stands within these big department stores.
GREEN: Yes, shops -- well, it's not a concession, it's a partnership (ph). And we've all but agreed with Nordstrom now to go from 14 to 42. So I think in terms of developing the brand, yes, Nordstrom is a great company. I like where their business sits, where the position is.
And at the same time, we want to open more of our own standalone stores. China, I'm seeing a few landlords this week, it's work in progress.
RAJPAL: When you look at the U.K. retail market, it has been going through a very difficult time. How then do you maintain a sense of continuity? You're in the risk business.
GREEN: Well, hey, show me one that isn't. Show me a business where you're not at risk. You know, we stuck to our knitting. We stuck to what we think we're good at. We want to have a great product. And I think we've got a brand that people believe in. They trust. They know what we do.
You know, we stick to exactly what we -- you know, leading. And I think if you do that and people believe in your brand, you know, it works.
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RAJPAL: What do you like about Topshop?
GREEN: Good question. Interesting.
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RAJPAL: We're in the heart of Hong Kong's Central District here. And you see it, the amount of energy that you feel here, I mean, I guess in terms of real estate this is really where you want to be.
GREEN: Well, if you can afford it.
Was not being in Hong Kong ever an option?
GREEN: I started discussing Hong Kong probably six or seven years ago. And we were looking at the time at the IFC (ph). And, I don't know, my team just weren't ready or different conversations.
GREEN: It went away.
RAJPAL: As we approach your store here now, your shop in Hong Kong, how do you feel when you see it?
GREEN: Well, I think when we go into a new territory like this, it's always exciting, you know, breaking a new market.
GREEN: So, you know, you're always sort of -- I don't take anything for granted.
RAJPAL: But is it really? I mean, is it really a sense of breaking a new market when you know that it has become such a brand that is known worldwide?
GREEN: I think every store we open is a new adventure. So (INAUDIBLE) in Hong Kong where we can show our brand, (INAUDIBLE) hundreds -- well, millions of international tourists walking by. I mean, it's a great billboard, isn't it? Has a corner.
RAJPAL: So you have -- you actually take quite a personal interest in pretty much even from where things are placed.
GREEN: Yes. Yes, we started actually this morning (INAUDIBLE), but we started with that front corner, actually the denim section. And I felt, you know, we should lead with the fashion.
RAJPAL: So is it all about the flow and where your eye eventually goes, or.
GREEN: Yes, well, look, I think it's about, you know, sort of you want people to travel the whole store.
RAJPAL: What do you like about Topshop?
GREEN: Good question. Interesting.
I'm assuming that's temporary, is it? Somebody building that? Yes? OK.
RAJPAL: Are the stores that -- in different countries, do they have the same kind of feel or do you want to maintain -- do you want to give it a little bit of a different flair because you're in Hong Kong or because you're in London?
GREEN: I think the whole idea is we try to do something new, just try and move on each time we do another country. And therefore I think that's the fun of, you know, how can we -- you know, how can we develop the business?
It's about trying to be consistent. So, you know, you think sort of from designing it to getting it to getting it here. It's not around the corner. So, you know, it's keeping a consistent flow of newness, which is what this market will require.
In a smaller shop, you've got to work three times harder.
RAJPAL: I have read that when you -- when you acquired Arcadia, it had 40,000 employees across the country, and yet you said you didn't have a single ally. How important is that to have people around you that you can trust and that you respect and who respect you?
GREEN: When I bought Arcadia with no due diligence, bought it cold, been in the building I think once in my career. Knew virtually none of the people in the building. So the starting point is, sort of, it's a learning education on both sides, because at the beginning you're thinking what's going to happen now, and it's trying to explain to people you can't run it without people.
GREEN: And I think they've got to start to trust you. So, you know, you're paying their mortgage, they're relying upon you. And it takes time.
RAJPAL: What kind of a boss are you?
GREEN: You can't ask me that, can you?
RAJPAL: I just did.
GREEN: I think I'm fair.
GREEN: Yes. I mean, I think -- you know, I think if I'm wrong I'm happy to say sorry. And if I'm right, I might get annoyed, it passed in five minutes, and move on. But, you know, when you're working with thousands of people, and I'm sort of working with people every day, I think they learn how to manage you, you learn how to manage them.
You know, you've got to sort of touchy-feely, you have to figure it out.
RAJPAL: Are you emotionally tied to your businesses?
GREEN: Well, you have to be. If you don't care about it, it's not going to work.
RAJPAL: Can that be a hindrance though at times?
GREEN: No. I'm not tied in that way. I mean, I think I care because I want to get it right. I mean, I wake up in the morning and if I don't like what I do anymore, I won't do it. So I've got to drive myself.
RAJPAL: Are there are other companies that you have your eye on that you would like to acquire and that you want under your umbrella?
GREEN: No. I've got enough to do.
GREEN: Well, these are challenging times. This is not easy.
RAJPAL: What about social responsibility? I ask this based on what we've also heard in the news lately about what's happening in countries like Bangladesh where factories have come under questionable workplace and labor practices?
GREEN: We have imported from Bangladesh this year 15,000 pounds to Topshop. That's it. But we have -- if you go on our Web site, we have a fantastic team of people who have -- and we have as good an ethical code.
We inspected several hundred factories last year. We've got a team permanently traveling. Our suppliers have to sign up. Now that doesn't mean you're not going to have accidents. You know, you're thousands of miles away, we don't own the factory.
And I think -- you know, we think we're very compliant. We do everything we possibly can to try and help make sure. And, you know, you can look at both sides. If we weren't in all of these countries manufacturing goods, then half the workers wouldn't have a job.
So we can balance the two. Now I'm not in control of what local wages are. I don't own the factories. But I feel that, you know, we worked with a lot of people for the last 15-20 years, and it has worked well.
RAJPAL: One of the things I notice, and when researching you, you have this way of thinking where there is something that you want to do, you just go and do it. You don't think about the if, why, where, what-not, you just go and do it.
Where does that courage come from?
GREEN: I've said in the past, I think I'm an educated risk-taker. You know, I understand risk. And I think I understand what I'm going into. And I've never bought anything in my career where I've worried about upside. I only think about, what happens if I'm wrong?
So, you know, buying Arcadia, buying all of these things, I'm thinking, what if I'm wrong, how do I escape? You know, the upside will take care of itself. So I don't sit there with lots of numbers -- I don't even think about the upside.
GREEN: No. Never bothered to even work it out.
RAJPAL: Do you ever think about retirement?
GREEN: What's that?
RAJPAL: Downtime? Off-time?
GREEN: Well, I think, you know, it's a balance. I think, you know, you need to sort of think about -- I sort of spend my -- you know, when I'm not working sort of flat out, thinking about things we should be doing, how can we change things.
You know, I'm thinking about sort of which things within the business we can do differently.
RAJPAL: Well, I guess when you've got a mom who is 94? You were saying that she's still working? You've got a lot to live up to.
GREEN: Yes. I've got time. I'm only halfway.
RAJPAL: Sir Philip Green, thank you for your time.
GREEN: Thank you.