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.
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In the year that fast fashion jewellery retailer Lovisa was launched its chief executive Shane Fallscheer set a staggering pace as he rolled out 51 stores in 52 weeks with the backing of veteran retailer Brett Blundy. Few Australian companies are so ambitious but in the age of fast fashion speed to market is everything. Also, Lovisa's initial stores had achieved internal targets and with the concept proven, the attitude of Fallscheer and Blundy was "why take two to three years to do what you can do in one?"
Six years on Lovisa has 250 stores, of which almost half are offshore, as it has expanded into 11 countries. During this period it also became a publicly listed company, in which Blundy retains the largest stake of 41 per cent. Fallscheer has a 12 per cent stake.
In 2010, Lovisa evolved as an idea from Diva, a tween jewellery chain, which Blundy's BB Retail Capital had owned, and Fallscheer managed for four years until 2009.
In that period, Diva grew quickly – at one point it was delivering a return on funds of almost 800 per cent – but there were already questions over its long-term sustainability because of its narrow, young customer base who relied on their parents' income.
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Money on the table
Fallscheer took a break in 2009, but soon came back to Blundy with a proposal for Lovisa, which would target customers aged from their late teens into their 30s. Fallscheer believed there remained a gap in the market for such a niche product retailer. "At that stage customers were typically buying fashion jewellery from apparel retailers, where it was a limited offering," he says.
Blundy backed the idea and Fallscheer became a partner with a 15 per cent stake in the business. "There was enough money on the table to keep you awake at night if things didn't go well," says Fallscheer. "Brett's a believer that if there's skin in the game then the behaviours are very different to someone who's a salaried employee."
In the next few years many Diva stores were closed or rebadged Lovisa and in 2014 the company listed on the stockmarket.
Fallscheer began working with Blundy in 1991 as a 22-year-old music store manager.
He progressed quickly at Sanity Entertainment, which from 2000 until 2005 was Australia's biggest music store chain. By the time he was 31, Fallscheer was chief operating officer of Brazin, Blundy's publicly listed company that owned businesses including Sanity and Bras N Things.
Fallscheer was Brazin's COO for a little over a year when an opportunity arose in 2001 to turn around two poorly performing music chains Sanity had bought from entrepreneur Richard Branson in the United Kingdom.
Fallscheer jumped at it. He moved to the UK to fix those businesses, which were renamed Sanity. Two years later it was sold to private equity at a small profit.
"The technology impact on the music industry was a bit further ahead in the UK than in Australia, so we sold," he says.
After that Fallscheer wanted to keep working internationally and soon became COO of Rip Curl's United States division as well as the company's global retail chairman. Then in 2005 Blundy came knocking to convince him to return to Australia to run Diva.
Working for Blundy, Fallscheer says there was always a culture of hard work and perseverance, which suited him. He admires Blundy's quick decision making and ability to always be available to staff. "Brett was always available, no matter how big or small any conversation. It's one of his strongest traits."
Blundy is no longer his boss, Fallscheer reports directly to Lovisa's board.
Change fast
When Lovisa was launched it was set up as a vertically integrated retailer. It allows the company to quickly adapt its product range to changing global fashion trends and respond to customers. It's a model common among international retailers such as H&M; and Zara.
"If something isn't working you need to change it as fast as you can at store level and you'll quickly get an answer from your customer if you've made the right or wrong decision."
Lovisa's in-house design team develops the jewellery with orders delivered every six to 10 weeks from a range of overseas suppliers. Lovisa has around 15,000 pieces of jewellery instore and introduces 100 new designs on a weekly basis. The fast refreshment of its range is aimed at encouraging greater foot traffic into its 50sq m stores more frequently to buy jewellery from rings, bracelets, necklaces to fascinators.
Lovisa has performed solidly in an industry where there are regular casualties. In the past year, brands and businesses from Dick Smith, SurfStitch to Willow and Metallicus have failed or reported significant problems.
Fallscheer is confident of continuing to deliver growth with the company's international expansion, while remaining No. 1 in its niche category. It's a view shared by the market, with Lovisa's stock trading near $3.30, well above the $2 share price it was sold at during the public float.
In the 2016 financial year, Lovisa's like-for-like sales grew 5.5 per cent, while net profit fell 6 per cent to $16.5 million. The latter included a $1.1 million foreign exchange loss.
"Our model is very transportable. We believed we would be successful, which fortunately we have," says Fallscheer.
ahyland@afr.com.au Twitter: @newsandimages
Read the profiles online and in BOSS magazine, out Friday October 14 inside The Australian Financial Review.
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