The 10 + 1 principles that drive the success of billionaire retailer Brett Blundy's companies have helped seven of his executives become very wealthy. This week BOSS magazine tells their stories.
Daniel Agostinelli had several difficult conversations with his parents when he began building his retail career, which made him richer than he ever could have imagined.
The first was to tell his parents, Italian migrants, he wouldn't be going to university but instead would be working to build a chain of music stores with a 22-year-old entrepreneur, called Brett Blundy. It was the early 1980s and Agostinelli was only 17. Blundy had to convince Agostinelli's parents he was making the right decision. "It was a difficult conversation," recalls Agostinelli.
A few years later, he again sat down with his parents. This time to ask if he could remortgage their investment property to raise money to invest in the expansion of the music stores. Agostinelli also leveraged his own apartment having already put every cent he'd saved, $46,000, into the business.
"I promised my folks I'd pay the mortgage out in five years," says Agostinelli. "I paid it out in 18 months."
Initially, the music chain now called Sanity Entertainment didn't perform well. "In 1993, we decided that the industry needed a change and some theatre introduced to it," he says. So they revamped the look of Sanity's stores, taking out ceilings and putting a real tar road through the shops that resembled a back alley.
"The look just resonated with the kids and our music sales exploded. We then tried another store and another and we ended up with over 250 stores in the Sanity business."
It taught Agostinelli, now co-chief executive of Australia's biggest footwear retailer RCG Corporation, an early and important lesson: retail stores must always be innovative, exciting and relevant to customers.
Finding Sanity in Ghetto
Between 2000 and 2005, Sanity was Australia's largest music retailer, having grown organically and through a string of acquisitions. Agostinelli's career opportunities and wealth mirrored its rise. He went from being Sanity's general manager in 1993 to its chief executive five years later, and also a millionaire.
Back then Sanity was part of Blundy's publicly listed Brazin group, which owned a number of retailers including Bras N Things. In 1999, Agostinelli became Brazin's chief operating officer.
By the early 2000s, however, Agostinelli wanted to run his own business and an opportunity arose in 2003 to buy a youth-footwear group called Ghetto Sport & Street. Agostinelli bought it in partnership with Blundy and left Brazin to run it.
Within three years, Ghetto Sport & Street needed more capital to expand, and it was sold to Brazin. (Blundy had invested in Ghetto through his private investment company Yoda Holdings, which also had a majority shareholding in Brazin.)
The Ghetto sale opened the door to the next chapter in Agostinelli's retail career at Accent Group and from there to RCG.
Agostinelli says what he learned from working with Blundy, now a billionaire who runs the private BB Retail Capital, was how culture drives business success. "I learnt that culture is everything and I've taken that with me into where I am today," he says. "Brett expected tangible evidence that culture lived and that was through the following: commitment from his team, perseverance, leading, acknowledging and overachieving."
Learning while earning
Agostinelli quickly lists other lessons he's gleaned from 30 years in retail. One of the biggest mistakes made, he says, is when retailers don't share with staff the vision of where they want the business to be. "If you really want to grow, you must tell your people where you're going or they won't come with you. We're essentially a people business selling product not the other way around."
He says retailers must continuously learn while earning; remember it's about the customer, always; teach staff; be disciplined and contain costs; and lead, above all.
"One of the other things that Brett taught me is that if you're a leader, you're on stage every day so make sure you lead. Staff look at what their leaders are doing, at their behaviour, and that becomes the norm. Keep the standard of whatever you're doing at a higher level so staff rise to what you expect as your normal level."
After Ghetto was sold, Agostinelli was approached by Accent Group. It had been a supplier to Ghetto and it wanted him to develop its retail division.
At the time Accent had sales of $30 million and one retail store. By 2015, its sales had grown to almost $200 million, with close to 100 stores. In that same year, publicly listed RCG acquired Accent. Now the group has a market capitalisation of nearly $900 million, almost 400 stores, 3000 staff and sales of $417 million. It's the largest footwear retailer in Australia, with one-fifth of the market.
Campaigning for customers
At RCG, Agostinelli shares the chief executive role with Hilton Brett. "It's a very sizeable business with plenty of runway left in Australia with almost every brand," says Agostinelli.
RCG stores include Platypus, Hype, Athlete's Foot and Grounded. Agostinelli says the challenge is finding new customers. To that end RCG is rolling out Grounded stores that target customers aged 30-plus. "I'm running a campaign to find new customers and that is what I feel every retailer in this country is now doing. If you don't look after your customers somebody else will."
Agostinelli says there were setbacks along the way in his career but doesn't dwell on them. "If you look back you're just going to get a sore neck. Stay focused on what you can change because you can't change what has occurred but, absolutely, you must learn from some of the things that weren't right."
Agostinelli still catches up with Blundy twice a year. They continue to share some business interests. Blundy's BBRC has a small investment in RCG, while Agostinelli owns almost 5 per cent of the shoe retailer. Agostinelli also has minor shareholdings in the listed companies founded by Blundy's BBRC: Aventus and Lovisa.
Reflecting on his career, Agostinelli finds himself echoing his own parents. He'd prefer his children went to university and avoided the struggles he's experienced. "I had a number of sleepless nights, worried about cash flow and with mortgages to pay."
The journey has never been about money, says Agostinelli, even though he has indulged his passion for cars with a collection that includes an Aston Martin and a Mercedes GT-S.
"It costs nothing to be a good person."
ahyland@afr.com.au Twitter: @newsandimages
Read the profiles online throughout this week and in BOSS magazine, out Friday October 14 inside The Australian Financial Review.
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