There is an epic saga taking place over at Superdry, the ailing British fashion brand. It’s a tale of brands and founders, of growth and decline, and it is best told in six very different chapters.
Our first chapter opens in a bucolic Cheltenham setting almost 40 years ago. A young Julian Dunkerton opens a letter, scans its contents and then throws it away in disgust. The dismal A Level results are nowhere near good enough to enable him to study medicine.
Instead, armed with a loan from his dad and an Enterprise Allowance Scheme from the Government, Dunkerton opens a clothing stall in the local indoor market. He has noticed that most of his mates do not have the access to the fashionable gear that Dunkerton, a Londoner who only moved to the West Country five years earlier, can usually get his hands on.
With entrepreneurial zeal and an eye for fashion, 19-year-old Dunkerton begins to make the two-hour trip to London. He visits the vintage clothing stores he knows from his youth, but buys in bulk and returns each week with bin-loads full of stock. His stall becomes the first of a dozen branches of Cult Clothing and, with business partner Ian Hibbs, over the next 15 years the network of shops becomes a big success.
Chapter two opens in a street market in Tokyo. It is 2003. Dunkerton and one of the suppliers to Cult Clothing, James Holder, are trendspotting in Japan and looking for merchandise. Both are taken with the Japanese obsession with clothes carrying bold, often nonsensical messages emblazoned across the front of them.
Adopting the style, Dunkerton develops Superdry as a strange hybrid of British tailoring, Japanese streetwear and vintage American style. It might sound like a mess on paper, but in conception the clothing strikes an immediate chord with a new generation of globally oriented consumers who are looking for something different.
The brand is soon being worn by the likes of David Beckham and Idris Elba. By the time the company floats in 2010 on the London Stock Exchange, raising £400m, it has 500 stores across 40 different countries.
Downturn in fortunes
Chapter three is set in Cheltenham on the unlikely industrial estate where Superdry’s head office sits. It’s March 2018 and Julian Dunkerton drives forlornly away from the business he started some 15 years earlier.
He has already stepped down from the CEO role in 2014 to focus his energies around brand and product challenges at Superdry, so this new move appears to make sense. Despite still holding 18% of the company’s stock he is now a very rich man and has other investments to maintain.
“I am immensely proud of everything achieved at Superdry over the past 15 years,” Dunkerton tells the newspapers. “With other demands on my time it is the right point for me to transition my focus and responsibilities.”
In private, however, Dunkerton is furious. He feels his voice is being ignored by the rest of the board. Dunkerton questions Superdry’s new strategy.
He rankles at the longer lead times that reduce the fast fashion credentials and innovation approach. He hates the “consultant-led business model” that he believes has shifted the focus of the business away from fashion and creativity. He abhors the idea of Superdry launching a kid’s range – how is that even possible? And he cannot stand the discounting that sees Superdry clothing, once famed for holding the line on price, frequently on sale.
His complaints are ignored, so he departs.
And Dunkerton appears to be right. As Chapter 4 opens Superdry’s leadership team are in crisis mode. Seemingly the moment Dunkerton headed for the exit, things started to fall apart. Sales are in decline and profits have halved. Inventory is not moving and Superdry clothing has been sold at a discount for 48 of the last 52 weeks.
The company blames “unseasonably hot weather” for its troubles. But that old chestnut will not work. As one analyst puts it: “You have to question a strategy which leaves the company so at the mercy of fluctuations in the weather.” A year on from Dunkerton’s departure, the stock market has wiped 70% from Superdry’s valuation. A major push is announced to cull 200 jobs and save £50m.
Which takes us to Chapter five, almost present day. We see Dunkerton sat at his computer typing. The three-page letter he is working on is addressed to fellow shareholders and asks them to agree two extraordinary requests.
He has, he explains, tried to reason with the board since his departure but all to no avail. He wants a place back on the company’s board along with fashion retailer and ally Peter Williams. Dunkerton’s sole objective, he writes, is to “revive Superdry”.
He directs the shareholders to a website he has created called SaveSuperdry.com, which contains his master plan to revive the fortunes of his beloved brand. Superdry’s board are outraged by the interference. They advise shareholders to reject the request and threaten to resign en masse if Dunkerton is allowed to return.
No-one knows which way it will go at the EGM.
Chapter 6 starts with a close up on an iPhone. Suddenly it springs to life and Julian Dunkerton reaches across with a deep breath and answers it. His face lights up. He has squeaked in by a margin of 51% to 49% votes cast. Within hours the nine-member Superdry board resigns. Dunkerton is back and…
…and that is the story so far. You are all caught up and now, dear reader, we must enter the world of fiction, speculation and punditry to reach our dénouement.
What comes next?
But before we do that, a few words on founders, brands and business. I’ve been lucky in my career. About a dozen times in my consulting life I have been shipped in by one large conglomerate or another to work with newly acquired brands and their suddenly suspicious founders.
I’ve worked in fashion, in retail, in beauty, in jewellery and in wine for brands that were acquired for eight-figure sums and went on to make even more down the track. Each time the brands and founders were very different, but each time the dynamic was remarkably similar. And there are a few enduring lessons I have taken from my time trapped between a founding rock and an acquiring hard place.
First, you don’t fuck with founders. They are always tough – they needed to be to get from where they started to where they currently sit. And they have power – so much power. The loyal employees regard them as demi-gods. The financial markets see them as the talismanic origin of all profits. And all too often customers still regard their presence as a signal of continued attractiveness.
They also have stupendous power to disrupt an organisation if they feel it is going in the wrong direction. But most importantly, you don’t ever want to go against founders because they get the brand. It runs through their veins. They are invariably right about most things to do with brand because the brand was, is and always will be theirs.
You can see all of this in just about every single recent photograph of Dunkerton in the media. He dresses with a certain boho-chic and smiles with a pleasant but vacant look that says ‘don’t fuck with me’.
There is a snag to this ‘founder as font of all things positive’ theory, however. Most founders, even the inestimable Mr Dunkerton, get old and change. Money, power and the ticking of a clock inevitably mean that the young, brazen founder that wandered the streets of Tokyo with a glazed look on his face is not the same as the 50-something multimillionaire who now divides his time between hotel, cider and fashion businesses.
That’s an issue because all too often the founder still thinks they have the fashion eye for what needs to be done next. Invariably they don’t and if you are not super-careful the brand can falter because the founder will not allow it to evolve.
The trick is to use the founder as data. Along with the loyalist research, the quant survey and the merchandise reports there has to be a major bit of historical analysis of the brand – even for one as young as Superdry. You must use Dunkerton not to tell you what to do now, but to describe what he did back then.
Work out what made the brand so special and then – the tricky bit – ask what that specialness looks like in 2020. Because the teenagers of 2003 are 30-something now. They are mums and dads. While the Superdry brand does not need to change its DNA, it does need to realise that what that DNA means to a kid in 2020 means something very different to one born 15 years earlier.
I have worked on brands with dead founders and ones with founders who were very much alive. I much prefer the former situation.
With dead founders we can interpret them as we will, perhaps applying a little bit of strategic mythology in the process. With live ones you have the unenviable task of gaining their trust, asking for their help but also moving the brand forward and away from its origin story.
Some founders take to this evolutionary approach. They see the sense and the dollar signs and recognise that I, and the big business behind me, know what we are doing. Others fight it. They refuse to become data; to be a ceremonial cherry on a cake of their making. Those situations are more difficult.
But with the caveat that the tactical and product application of the DNA might need to change, the return of a founder to refocus strategic principles and restore appreciation for the brand position is a recurring story in business. Howard Schultz famously returned to Starbucks and turned things around. And, of course, there was that little story about Steve Jobs and his resurrection of Apple.
I would have concerns if Dunkerton takes up the design role again, but I would trust him to be the CEO in a heartbeat. He is, after all, a retailer not a fashion designer, and his three decades of consumer proximity and speedy decision making will be essential for the months ahead.
Everything in his manifesto for fixing Superdry appears spot-on. He wants to stop being so market-oriented and return to Superdry’s design-led routes. He wants to scrap the kids wear range that his predecessors introduced because it will damage the credibility of a street brand like Superdry and distract the company from the revitalisation mission ahead. He wants to speed up product turnaround to a 12-week period from sketch to sale.
This will improve the agility of the design teams and reduce the need to hold stock. He also wants to reduce discounting and will focus on gross retail margin, not revenue, as the bellwether of his initial success. Smart. And he wants a bigger investment in communications, and specifically social media, to reach the 16- to 24-year-old consumer.
Chapter 6 continues with Dunkerton walking purposefully through the industrial estate in Cheltenham to the HQ of Superdry, the keys jingling in his pocket. He pauses as he passes the Bosch service plant next door and smiles as he looks over at the small engineering company at the bottom of the road. It is an unlikely place to build a fashion empire. But not, he thinks to himself with a smile, an unlikely place to resurrect one.