Steinhoff CEO Markus Jooste has been South Africa’s leading racehorse owner for most of the past decade. He never bets on them, one of the reasons for longevity in a sport with a higher churn rate than Pay-As-You-Go phone contracts. Jooste restricts his betting to people. And in former Asda CEO Andy Bond, Steinhoff put a staggering R10bn on the table. Bond is charged with turning the recently acquired 800 store Poundland chain into the jewel of Steinhoff’s rapidly expanding European retailing empire. A 51 year old fitness fanatic, he became one of the UK’s most recognisable CEOs when, soon after his 40th birthday, Bond was promoted to lead Walmart-owned Asda, the UK’s second biggest retailer (after Tesco) which employs 170 000 people. After five years in the saddle, the man who hails from the same town (Grantham) as famous grocer’s daughter Margaret Thatcher, quit because he didn’t want to move to the USA. Now he’s ended up working with South Africans. Here’s the inspiring story of a man who, famously, seemed destined for a much lower path after failing the UK schooling system’s infamous “11-plus” exam. – Alec Hogg
Andy you have quite a lot of South African connections, but the biggest one right now is your partnership with Christo Wiese and the Pepkor side of Steinhoff. Letās just go back a little though. South Africans would have come across your name at the time of the acquisition by Walmart of Massmart; you actually drove that whole deal.
Yes, I did. At the time I had actually stepped away from being the day-to-day Chief Executive of Asda, but weāre still employed by Walmart and it was very much Walmartās ambition to enter the African market and asked me to have a look at that for them. We looked at a number of different entry strategies and thatās how the deal with Massmart came about, so yes, I was actively involved in that.
Now Asdaās not well known by South Africans, but itās a huge business, second biggest retailer here in the UK. You worked there for 16 years, ran it for five years, why leave?
Iām very consistent now in terms of why and itās consistent with what I said then really, which is Iād just come to the end of the journey with Asda and Walmart. The next obvious choice for me was to go and work for Walmart in the US and whilst itās a brilliant company (I remain consistent with that), that wasnāt for me and so I chose to step away. I also have the privilege and choice to work slightly less hard for periods of time, so I spent a bit more time with my family, which was an important part of the decision-making. It wasnāt a fall-out or anything like that. I just wanted to do other things, have a slightly different balance in my life and I enjoyed that period of time. Fortunately, or unfortunately, Iām now working very hard again.
Itās an interesting part of your life. To get to the top of that tree must have taken an enormous amount of focus, energy, effort, did you feel you were a little burnt out perhaps, or where does the motivation come from?
No, Iām not burnt out at all. It was very, very clear to me as a guy who was climbing that corporate ladder that I was at that moment to take the next step up, but that next step up within Walmart would have meant physically moving and it was a choice I wasnāt, (or āweā as in myself and my family) werenāt willing to take, so it wasnāt a case of stepping off the ladder because I was burnt out. Yes, I then did decide to do a slightly less, all-encompassing set of things. Yes, I certainly didnāt feel burnt out but wanted to do something different and I guess it perhaps was slightly unusual, but then Iāve thought of myself as someone who has always had more interests than just work anyway. You know, Iāve always wanted to be reasonably balanced, so yes, I wanted to do some other things.
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Then you get involved while you stepped down as CEO, youāre Chairman of Asda, a 170 000 employee business and Walmart, the biggest retailer in the world says āGo and do this deal for us in South Africa”. That must have been a challenge that you hadnāt anticipated given that you wanted to take things maybe a little easier.
Yes, absolutely, but it was a very exciting assignment. I personally really like South Africa and I found the time going there, looking at the different businesses, a very interesting time. It was quite challenging as you say, but yes, very good experience and a good outcome for Walmart in their acquisition of Massmart, so yes, a good time.
You say āa good outcomeā; there are some who feel that Walmart got less than it bargained for.
Well, without seeming disinterested, Iām not at all close to the Massmart business today, so I generally canāt comment on how thatās gone for Walmart, but I reflect back at the opportunity at the time and there was definitely a business with opportunity that we bought. I canāt comment whatās happened since.
The departure of Grant Paterson and Mark Lamberti, the founder/chairman stepping off the board, itās quite a big shakeup that happened pretty soon after the deal, was that always in the works?
No, it wasnāt. Although you know in retrospect these things should always be expected as one of the scenarios. It certainly wasnāt Plan A when we bought the company, but I look at Walmartās acquisition of Asda, I look interestingly at Steinhoffās acquisition of Poundland where we are today, a common thing, this churn in the senior leadership and I donāt think itās ever Plan A, but you know you have to anticipate it as one of the things that will happen.
Moving onto a more pleasant development and as you say, Steinhoffās acquisition of Poundland, it was third time lucky. There were two other big potential acquisitions, was this the one that you really wanted from the start?
Yes, well I think that first of all to clarify, in a sense itās one of two activities here in the UK. The third activity I think youāre referring to is Darty in France, which was run as a very independent process through the Steinhoff business Conforama, so Iāve really got no input into that, but yes, in terms of the choices we had here, we were very interested in the Home Retail Group, but eventually felt that the price that was being considered was just not right for us. So we proactively stepped away from that opportunity and itās an independent decision in that sense, whether we feel Poundland is or isnāt right.
As it happened, clearly we feel very excited about Poundland, so yes, it would have been nice to have been part of a family involving HRG, but at the right price and now this is a fantastic opportunity in Poundland, and itās very much more clearly consistent with the heartbeat of Pepkor than the other opportunities. This is so comfortably about what Pepkor and what I personally am all about. You know, my own history in Walmart, Asda was all about providing people on a budget with very good value products and thatās really what Poundland does and thatās what Pepkor does, wherever it goes it provides amazing value to people struggling on a budget.
When did you meet Christo Wiese?
Well, Iād heard of Christo for some years before I first met him and then I actually met him during one of my visits to South Africa as part of that sort of journey to understand what the opportunities were for Walmart in South Africa, met him informally, both in terms of his position as a senior retail expert, but also in his position in Shoprite and you know, look it wasnāt a particularly formal or detailed meeting but it was an opportunity to at least understand South African retailing, but you couldnāt possibly go to South Africa and not meet Christo Wiese if you have the chance. So I met him there and then.
Did you click from the outset?
Yes, I think heās a remarkably capable individual and I think heās both very bright, clearly a very good invested, very good handle on retail, but heās also one of these guys who manages to inspire and motivate people to want to work for him and with him, so yes I really liked Christo from day one. Nothing happened immediately at all of course, so you know, our journeys went in different directions. Walmart ended up with Massmart, which was a good deal as I say. Then I got connected with him again through a third party, someone who knew both of us and I was setting up an investment company and Christo was interested in investing some money in the UK, but he bluntly wasnāt interested in having another independent relationship, so heās always organised most of his affairs around Brait, Shoprite and Pepkor and he encouraged me to leverage the retail expertise and relationship of Pepkor.
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So actually when we set a company up here as an investment vehicle, it was actually called Pepkor UK, so it was technically a subsidiary of Pepkor and thatās how we then launched Pep&Co, our clothing brand thatās done very well since we launched it 18 months or so ago. We then launched another broader range discount business called GHM and then obviously, most recently have bought Poundland and all of those have sort have been under that same sort of relationship with Pepkor, so I remain in reasonable contact with Christo, but my primary relationship with his interest is Pepkor and now obviously Steinhoff.
Just to go back to Pep&Co, it was an incredible launch, certainly everything that Iāve read about it, 50 stores in, was it 60 days, how do you actually engineer the logistics around that?
Well, itās hard work as we found because we cocked a few things up along the way, but yes, I mean look to go from zero to fifty in fifty days is hard work and you know, I think I should only take a very, very part of the pat on the back there. You know a lot of the team did a super job and worked incredibly hard.
So it was 50 days?
Well, no sorry, yes youāre right, Iām misrepresenting reality. It started at trying to do 50 in 50 days, but it ended up taking us nearly 60 days.
Why did you give yourselves such deadlines and such a heavy programme?
Yes, itās a great question. Iāve asked myself that on dark night, but the honest answer is itās essential because whilst Pepkor has some very good infrastructure that we were able to leverage off like good IT systems, good relationships with vendors. The reality is that the UK market has some degree of difference from other markets that Pepkor is in.
The consequence of those, we needed to go out and design and buy products specifically for the UK market and to get sufficient volume to get good prices to be able to compete at entry price point level, because we donāt want to be a midmarket retailer, we aspire to be low-price, very competitive family clothing brand. The answer is you need to go big or go home. You know you can open two stores and see how it went. This was a pretty big bet that myself and Pepkor and Christo needed to take. So it was literally a case of it was the only way of doing it really.
As you say, yourself, so you put money on the table.
Yes, I did. Compared to the amount that Pepkor put on the table it was a small sum of money, but my main stand was, yes it was a significant amount of my own wealth. So yes, I was willing to āput the skin in the gameā as the saying goes absolutely, yes.
Why Pepkor and I say this running the second biggest retailer in the UK puts you in a certain position of well, having to have a general managing a huge army. You resign from there, you take things a little easier, do a deal in South Africa on Massmart, put that to bed, presumably caught your breath for a little while and then next thing youāre popping up as a man who opens 50 stores in 60 days. How does the congruity come there or did you always want to be an entrepreneur?
Yes well, I will answer it but Iāll also give you time to reflect on a question I want an answer to, which is I wonder what you think the obvious thing I should have done would be? You know because a I would argue that whatās probably on your mind, in my view is just do more of the same, you know and I didnāt really ever intend to have a career where I would just see whoās Ground Hog Day, so wake up and Iām Chief Executive of another business, but actually itās the same stuff, but itās just a different name above the door. So for me I donāt get why it was obvious I should have gone and been Chief Exec of this business, why, I mean why is that? I mean I might as well have just stayed doing what I was doing, which in itself would have been a bit dull after a while, but yes, it may seem a change in career, but I wanted to do different things.
Well, were you always entrepreneurial, thatās really what Iām getting at?
I guess we all have a different view on what entrepreneurial means. I guess Iāve always been a little bit anti-establishment and a little bit willing to take a risk, so Iād certainly accept that, if theyāre what entrepreneurs are like then yes, Iāve always wanted to be somewhat entrepreneurial, Iāve always wanted to take a bit of a risk and Iāve always wanted to sort of be more captain of my own destiny there, so yes, if that describes an entrepreneur, then yes, Iāve always wanted to be an entrepreneur, absolutely.
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One of the reports at the time that you departed said it was a shock for the city and another of the reports said the reason why you left Asda was that you werenāt being given the fire power to be able to grow it into attacking the number one, Tesco, is there any truth in either of those?
No, absolutely not. I was extremely well-supported by Walmart. I still see it as a super company. There were no real constraints on what I was or wasnāt able to do. As I say, you know that there arenāt many people in my generation who spent 16 years at one company, so I did my tour of duty as it were and it just seemed like the right time, no fallout. I also donāt think it was a real shock, you know Iād spoken to Walmart for a number of weeks before it was announced, you know it was all very amicable and actually the reality that I stayed on as Chairman for a period of time demonstrates good relationships on both sides of the table. I didnāt walk away, they didnāt throw me out, and in honesty I was always going to leave. That period of transition was always a transition period.
It is exciting going into a start-up effectively because thatās where you were.
Yes, totally and as you say in some ways itās incongruous because I was running a business with hundreds and thousands of people, but itās super exciting being involved in a start-up. You know, itās very, very appealing.
Onto the first attempted acquisition which was the brand here known Argos, when the numbers got out of kilter, was it an easy decision for you to walk away?
Oh yes, absolutely. As I say, the Home Retail Group is a good company and as you say, to clarify for people, it was called the Home Retail Group because actually I had two businesses Homebase and Argos. As part of this whole thing Homebase was going to be sold to someone else and so all that was left was Argos. Argos is a good company, is a good brand and what it does is good, and I think itās a good acquisition for Sainsbury, so we didnāt walk away because we thought āWell, weāve looked in the covers and itās a rubbish business no one should buy itā. Itās a good business and I think Sainsburyās have done a good deal. It just wasnāt quite right for us at the price that was being considered, so it was a purely logical financial decision. So yes, I think it was a good outcome for Argos, a good outcome for Sainsburyās and a good outcome for us.
At the time were you already looking at Poundland?
I sincerely canāt remember where we were, but I think a broader way of answering the question is that weāve wanted a scale investment in the UK for some time and this is a wonderful business and I certainly, look Iāve been in retail for 22, 25 years now, so Iām running a book on everything all the time as it were in my head. I visit High Street, I look at stores, I know the businesses I like and the businesses I donāt like, and Iāve liked Poundland for years.
Do you still do that, do you still go and visit stores and now in this case the Pep&Co stores and now presumably Poundland?
Oh yes, absolutely, totally. I mean bluntly I canāt imagine being a retail leader who doesnāt visit shops. You know I donāt know what youād do if you donāt have insight into whatās going on in your shops.
Do you have a process?
Not particularly. I think there are two very different ways people visit shops. One is to assess the operational detail of that shop, is that managed, is that team running the shop well for its customers and then thereās another way of visiting shops which is to say the things weāre trying to do generally for customers are these things, are they working generally and Iām much more the sort of guy who does the latter rather than the former. Iāve never run a shop myself, so I think it would be quite disingenuous of me to try and tell a store manager how to run a shop, but also I think in a sense the bigger impact Iām going to have on the business is if I try and take away from that visit the things that can impact the business overall rather than that store specifically.
So you know, whatās a random example, that weāve got some new products coming into the shops, I want to know if those products are selling well generally rather than just in that shop, what do they think about those products, what are customers saying about those products? Itās things like that, thatās my method of visiting stores is to try and understand about the business generally rather that that store specifically.
Youāve never run a shop, but you come from the same town that Maggie Thatcher, the most famous daughter of a shopkeeper comes from.
Oh yes, indeed. In fact, funnily enough her dadās shop is a shop that I used to go past every day on my way to school. Yes, I mean it wasnāt a shop by then, but yes, I know that shop very well and obviously I know that story very, very well, so yes I am fortunately, or unfortunately. Yes, the town is well-known for being the town where Margaret Thatcher was born.
Itās also a part of your story that you failed your 11-plus. Now people in South Africa have no idea what an 11-plus is, can you explain what it is and why it is so important that you turned it around?
Yes, of course. I will try and give you the simple rather than the deeply socio-political answer to that question, but yes, until relatively recently people at the age of 11 had to do an academic exam. If you passed it you went to a highly selective school, which provided what you could argue was a better, certainly more accelerated education for the better students, if you failed it you went to the large majority of what would some people judge as the more second class schools.
You know if were being a little bit political about it, you could argue it was a somewhat elitist system because inevitably kids from a less privileged background would have less opportunity because of all of the social impacts that meant that they were less likely to, (and by the way Iām not saying that was my circumstance), but you know itās certainly by a lot of people was judged as a very elitist system because it tended to be wealthy families whose kids managed to get through because they had private tutoring to pass the exams etcetera. So yes, I failed and I went to a secondary modern school, which I described probably slightly disingenuously as a second class school, certainly, you know your career and life opportunities statistically were poorer.
You knew this at 11 years old?
Iām not sure I was probably quite as articulate about it as I just have been, but yes you knew. I mean look, youāve just said yourself, you failed, thatās what you knew. You knew you had not passed and you certainly could immediately tell the difference. One of the simplest differences is when I went to school, if you went to secondary modern school, your formal education finishes at 16, whereas if you went to a grammar school your formal education typically, not legally but generally everyone stayed on to 18 and then the vast majority of those kids then went on to university. So in really simple terms, if you went to secondary modern school, you left school at 16 and you went into some kind of apprenticeship, if you went to grammar school, you were educated all the way through to 21 and got a degree, and I know there were shades in the middle, but thatās roughly what it was like.
Iām trying to work out while I was doing the research here, hereās a guy who got four A-levels, you got a first class university degree, you were top of your class doing your MBA, how the devil did you fail as an 11-year old?
Well, I was 11 wasnāt I, I guess, but I donāt know, itās a very good question. Well, I donāt know, I mean youāll have to ask academics. Iām either a bit of an aberration or it shows the problems of that selective system, doesnāt it, you know, one or the other and certainly a lot of the kids who I met at secondary, not a lot, but there was clearly a substantial number of errors made in that system. Certainly, having been to secondary modern school and then to complete the story, I actually got transferred from the secondary modern school to the grammar school after a year.
Thatās after working really hard no doubt.
Yes, so having been through both schools I can certainly assert strongly that the system did not act fairly. There were many kids at the secondary modern school who were better than the kids at the grammar school and vice versa, so you know I mean itās not a fair system and I guess Iām an example of where it went wrong, you could argue.
Andy, for young kids who are perhaps stuck in the equivalent of secondary schools, what would you suggest to them because clearly your story shows us that, that kind of a selection of if you already put into the wrong stream, if you like, doesnāt mean that you havenāt got it; how would you advise someone who finds themselves, or parents who find their children in that position?
Yes, well itās good that you differentiate the two, because I think both have an important role to play. I think as far as the kids are concerned, I think youāve got to first of all not get your head in a place that youāre written off. You donāt want to permit yourself to feel youāve been written off and youāve also therefore, got to work. Itās your responsibility to work hard to sort of get yourself out of what could be a difficult situation. I think thereās not a lot more than a child can do other than work as hard as he possibly can and have some sort of hope and not allow yourself to get too despondent about it and then you mentioned parents. I was very lucky that my parents sort of fought hard on my behalf to move school and I think you have to feel the right and obligation as a parent to fight on behalf of your kids really.
You got into a school where Sir Isaac Newton was an ex ā
Yes, Thatcher and so I often say, and Nickās getting bored of me saying that. Yes, absolutely and it was interesting. Obviously itās a consequence of that comment; you know itās a very, very old school. I donāt quite know the exact history, but one of the kings of England many years ago set up geographically a number of schools and theyāre all called the Kingās Schools, so I went to the Kingās School in my town and there are lots of them across the UK and these schools were all set up in the same era and they were all set up to educate the boys as it was in those days, certainly not the boys and girls, the boys of the middle class of that time.
Fascinating story, fast forwarding to Poundland today and you are, from your roots as it were, of knowing normal people, you are now very much plugging into that. We see Poundland and Pep&Co serving, is it Middle England, is that what you call it?
You know, itās interesting; Nick and I were talking about this earlier. Our ambition and our purpose is to help people on a budget sort of live better lives by keeping the price of goods that they need at a low price, so on one hand that may give you a vision of someone whoās really struggling to make ends meet and certainly that would be our purpose and our aspiration, but actually brands that do a good job in that way tend to attract a very broad populace and itās certainly not true today as it may have been 30 years ago that thereās a very segmented UK population, that if youāre wealthy you shop at Shop X and if youāre poor you shop at Shop Y.
Poundland, like other good discount companies like Asda, like Primark, like Aldi, attract a very broad spectrum of the population. In actual fact the research done here says that in any three-month period 56% of the whole UK population in terms of household shops in at Poundland and that is representative of the broad demographic spectrum. So there are as many wealthy people in proportion in Poundland as there is in the UK, so itās a very, very broad church of people who shop at Poundland.
There are 400 outlets, are you intending making it bigger?
Well, no actually youāve got the number wrong there in terms of 400, thereās actually in total 900 outlets. On mainland Great Britain thereās just over 800. Thereās I think 56 stores in the Republic of Ireland, about 30 in Northern Ireland and then 11 in Spain, so certainly there are many new locations to build out in mainland Great Britain, but certainly there are some towns, as an example, the town I live in where there isnāt a Poundland. So there are still opportunities to grow, but selectively. I think the real opportunity, if we get the business back in shape is to expand the business, thatās where the real step change opportunity is.
Does it have a particular line that it focuses on? Again, talking to people who have never been to a Poundland, you can understand that thereās a lot of product there that sells for one Pound. What kind of product, you know the Pep Stores in South Africa, is it similar to that?
No, itās not, itās quite dissimilar actually. I mean the Pep business is a clothing business that services a family, you know you clothe your kids first, yourself as a mum and then something for dad and thereās a few other homeware items and a very small number of grocery items in a Pep and then of course itās now very big in cellular phones, but its heartbeat is clothing and the heartbeat of Poundland is ambient grocery products and general merchandise, so confectionary, DIY, seasonal goods, so you know Christmas goods for Christmas, Halloween for Halloween, thatās really where itā¦ Now one of the great opportunities we have is because weāre strong in clothing, to introduce clothing into the Poundland stores, so for sure over the next few months you see Pep&Co clothing start to appear on the shelves of Poundland stores.
The other question that always comes to peopleās minds when you look at the low price retailers is where you get your products from because to be able to sell something for one Pound, presumably you buy it a lot cheaper and there are many products there that look like theyāre worth a great deal more.
Yes, well first of all Iām glad you think they look theyāre worth a great deal more. That is actually, in very simple terms exactly the strategy of Poundland, is to identify products where other retailers are making very large margins, charging people what we would argue is too much money and we can still make a reasonable amount of money and sell it for less. In terms of where weād buy these products from, you know weāre now over the last few years all very aware of our obligations from a sourcing point of view and Iāve worked for Walmart, as weāve already referred, which has been very, very strong on its ethical stance.
Former Asda boss Andy Bond is upping his assault on the UKās discounter market with the opening a new chain called Guess How Much!
— Capital Moments (@CapitalMoments) June 6, 2016
I would have been anyway, but I think having worked in that environment makes me even more strong-willed about that and so Iām very comfortable that we are sourcing products from ethical places in ethical ways, but equally we are pretty tough-minded about getting the lowest possible price for stuff. So we donāt have any problem arm-wrestling vendors for the lowest possible price, but also as I say, I think itās worthwhile recognising that even in todayās world, thereās still a lot of retailers out there selling goods much higher price than they need to be in my view.
So you have a margin and if you can see products that are being sold for above that margin thereās a market opportunity.
Absolutely, as you say, I mean what weād love everyone to respond to when they see a Poundland, one Pound item is,āGosh, I thought that would have cost me two Poundsā and interestingly weāve just launched our first TV ad, the first time Poundland has ever been on TV and it was a series of unscripted scenes of an interview, going up to people and asking them how much they thought an item would be and then filming their response. You know you get people who have been shown a cushion and someone saying they think itās going to cost four or five Pounds and then when itās displayed that they think itās worth, itās actually cost a Pound, they canāt believe it and thatās the sort of way we design our merchandise, is actually the most important thing is that everything needs to look like it should cost significantly more than a Pound.
From an investorās perspective itās a big bet that the enlarged Steinhoff is making in the UK, Poundland has struggled. The acquisition of 99p Stores didnāt go that great. Do you have a runway to profitability thatās quite close?
Well, the company remains profitable. This is not a loss making business. People will easily be able to understand the history of the profitability because it was a listed company before I bought it, so anyone can access the information on the companyās profitability, but what is profitable, I agree and recognise your point that says the business should do better and youāve also identified one of our critical issues, is in that it bought 99p stores and that acquisition was difficult. You know, it tried to eat something very big and has got indigestion. I think we understand what the issues of that have been and Iām very confident weāre working through those things and so Iām very confident that reasonably quickly weāll start seeing improved performance.
Iām also confident that we can add value in other ways. Weāve talked about Pep&Co Clothing, where Pepkor is a business that sources a lot of very good merchandise that we can add to Poundland. Interestingly Poundland offers Pepkor some great opportunities. There are many items in stores here in the UK that we should be looking to sell elsewhere in the Pepkor Group. I think itās a very good acquisition. I donāt disagree with you there that the business should do better and Iām very confident it will do better.
From a broader perspective though in retailing, the Amazon effect is easy to see here in the UK where you can order something for a very low price and it arrives at your door the next day, youāve got to wonder where the profit margins are being made as a consumer and youāve also got to wonder how stores like yours or companies like yours are going to be able to defend themselves against this.
Well look, I mean I think if anyone was to do a Google search on the stuff Iāve said I would certainly agree that online has been a major disruption factor, certainly across the world, but particularly here. You know the percentage of retail takings online in the UK is the highest in the world, so it definitely has disrupted the market, but I donāt think itās disrupted it in an even way. Clearly some categories and some price points have been disrupted much more than others, so point one is that I agree that online is a very disruptive influence. I think that therefore every retailer needs to understand and have a response to that customer demand to shop online and at home. Now (Iāll come back to that point), as far as our business here, I think that we are a business that will be more shop-based for longer than the vast majority of companies. We sell everything at a Pound.
The average number of items people buy in our shop is five items, so people spend an average of five Pounds. The reality is that somebody has got to pay for that home delivery, whether itās the retailer or the customer, somebody pays and on average that costs somewhere arguably between, letās say two and four Pounds. Now thatās a very substantial proportion of a five Pound basket. I donāt think that weāre going to be as disrupted as companies that sell merchandise where youāre spending Ā£1000 and itās a two to four Pound delivery charge. So I think itās obvious some categories are going to be disrupted more than others, there are white goods, electrical goods, you know things that are high ticket price, and reasonably priced, easy to price compare are going to go online most easily.
The way we will need to respond first is the fact that our shop is still shopping in that domain, so we need a presence, we need for people to be able to go onto our website and understand what weāre about, they need to understand the merchandise we sell, where our shops are and we need to have a marketing point of view online, we need to be involved in social media etcetera. So I certainly think even Poundland will need to be online and have a presence online quickly. We do have a transactional website, but thatās very small and I think it will remain very small for a long time, but all that said I go back to your point, I think online is the biggest disruptive influence thatās been in retail for a generation.
How did the Steinhoff acquisition of Pepkor affect what youāre doing here in the UK?
Yes, good question. Iāve got know Markus personally over that time, the top team. I rate them as extremely capable and good people, but that said it actually hasnāt affected my day-to-day life that much other than bluntly, we may not have bought Poundland if it had just been Pepkor, so as you said, itās a large sum of money and itās a sum of money that the balance sheet of Pepkor might have struggled a bit more with than the balance sheet of Steinhoffās, so Iām very grateful for the support that the team have given.
Markus has been very supportive, but in terms of day-to-day operations, I mean one of the mantras of Steinhoff is itās a very sort of strong local leadership, very heavily mandated to do the right thing for local customers and thatās the way it does work in reality. I see Markus reasonably frequently, but both him, Christo and Pieter Erasmus, the guy that runs Pepkor are all familiar to me, we all seem to have a good working relationship, but at the end of the day I run the business here in the UK and they back me to do that.
Just to close off with, the strategy up to this point has been 50 stores in 60 days, an incredible achievement that you did, but it did give you the scale, then to start a new brand alongside this and continue to grow Pep&Co. Now you have Poundland, which was a huge acquisition, which presumably gives you the scale. Is it time to digest or are you still interested in achieving even greater scale?
Yes, it is time to digest really. You know there are many things that we need to get right here in Poundland as we referred to earlier. My responsibilities also include the Pepkor business in Eastern Europe, so we now have two business of scale, one in Western Europe, one in Eastern Europe, so you know, one argument is that, you know letās just grow organically from where we are. Another argument is we could do with some more acquisitions. I think both of those are options, but right now the focus is letās get to grips with Poundland, letās make this a success. It provides me; it earns me the right to have choices as to what we do in the future. If we make a success, both investors in Steinhoff, but equally important Christo, Markus, Pieter will back us to do other things, whether it be to grow organically or acquisition-wise. Iāve just got to prove that we can manage this business well right now.
Personally, are you having fun again?
Yes, Iāve never not had fun. I enjoy being involved in this business. It is the first business that Iāve run, as it were, day-to-day for a number of years. You know, Pep&Co was my baby, but there is a guy Adrian running that day-to-day, so that was very exciting, but someone else was running that. Iām actually right now running Poundland, although, as you know, as we said Iāve got some other responsibilities, so yes, this is the first time Iāve run something for all and itās good. You know you get the email at 06:00 am with the sales results from the day before and it changes your mood one way or the other. Yes, itās interesting getting back involved in that way, absolutely.
