Theo Paphitis: Dragons’ Den star says the high street is going nowhere and neither is he
Theo Paphitis is not in any hurry to hang up his boots.
After decades running the show at companies from lingerie to stationery firms, one might be mistaken for thinking the Dragons’ Den star, retail titan and former Millwall chairman may be mulling a change of pace.
However, Paphitis tells City PM he has “a few miles in me left,” off the back of being lauded by industry peers this month with the RetailWeek outstanding contribution to retail award. “People retire to do what they love – I already do,” he says.
The high street is presently tussling with a need to push prices up to mitigate rising headwinds while keeping prices competitive as consumers pull back on spending due to rising bills.
With economic experts warning the country is flirting dangerously close with a recession, the Confederation of British Industry has warned the government must intervene to revive growth.
In Paphitis’ view, the government was asleep at the wheel as inflation hits a 40-year high and threatens to strangle business’s Covid recovery.
Describing the government as “in total disarray,” the retail titan said the Prime Minister appeared more concerned with “keeping the party from ripping itself apart” while the Bank of England seemed to be “having nice lunches” and doing nothing to help business.
Businesses had been left to fend for themselves with only “little baubles and toys,” in the way of government support he said.
Retail bosses were facing a cocktail of cost increases, including utilities, additional National Insurance contributions, and salary hikes with the raising of the National Living Wage.
These tax increases would soon be reflected in the level of investment and employment businesses can afford, he said.
Paphitis was pessimistic about the prospect of the government assessing calls for reform of the business rates system, saying previous reviews had not resulted in “any change whatsoever.”
“I’m expecting absolutely zilch, zero,” he said.
On an online sales tax, the retail titan echoed his high street neighbours, including supermarket Sainsbury’s, who have urged the government to level the playing field between e-commerce giants and bricks-and-mortar retailers.
Anyone with “half an ounce of brain power” would see the lack of sense in “putting the burden of taxation onto the poor humble shopkeeper on the high street,” as opposed to taxing e-commerce heavyweights more, Paphitis said.
The economic situation had all the “hallmarks” of being worse than the 2008 financial crisis, if allowed to continue, he said.
The OECD has forecast the UK has the worst economic prospects out of any G20 country, with the exception of Russia. “It’s a worry because we are in huge danger of stagnation,” he said.
For Paphitis, the frustration arises from the man-made nature of the current economic predicament. “You can accept the things that cannot be helped,” he says, pointing to the pandemic.
“It is disappointing and I use the word frustrating because it doesn’t have to be.”
Ryman, traditionally seen as the “stationery cupboard” of the City, was still on the road to recovery back to its pre-pandemic levels of glory.
The chain posted an earnings loss for the first time in 25 years at the start of the year, after lockdown restrictions hammered footfall.
Office worker hubs had been “hit quite extensively” during the pandemic and were yet to recover with many workers continuing to work from home. “We rely on the business community,” he added.
“People are not back at work to [2019] levels, that’s something that will need to happen for Ryman to recover to the same level of turnover it had pre-pandemic.”
With the 150th anniversary of high street staple Robert Dyas approaching, Paphitis says the hardware retailer had seen a “real modernisation” with 50 per cent of turnover from online and was not the “sleepy business” it may have once been.
Despite the gloomy economic forecasts, Paphitis’ long term optimism about the future of the high street was unswayed, having seen “loads” of recessions “come and go” in his career.
“We’re a great nation of shopkeepers,” he said, adding that he hoped to be able to look back in a few years’ time at the present and say “Thank god, we got over that.” Time will tell – but it wouldn’t be the first time this retail stalwart’s optimism has been proven right.