The recently released Sunday Times Rich List of Britain’s wealthiest 1000 people contained the usual group of Australian money-management stars, led by Michael Hintze (valued at $837 million on the list), Greg Coffey ($383 million) and Hilton Nathanson ($280 million).
But there were also some surprises.
Controversial Hungarian/Australian miner Frank Timis soared up the list to jump into Australia’s billionaire club with a fortune of just over $1 billion.
Timis, who has convictions for heroin trafficking and theft, has had several run-ins with various corporate regulators and must surely be one of the most colourful rich list members anywhere in the world – just check out his director’s disclosure for National Stock Exchange-listed African Petroleum.
However, one of the British-born stars of the list also has a close connection to Australia.
Doug Perkins, who along with his wife Dame Mary Perkins founded discount optometry chain Specsavers, hit the headlines last week after the pair joined the £1 billion pound club. Their fortune jumped from £340 million ($523 million) to an impressive £1.15 billion ($1.8 billion), making them the 56th richest people in Britain.
Part of the reason for the rise if the company’s rapid expansion in Australia, where in the space of three years it has opened more than 250 stores and turned the staid optometry sector on its head with an aggressive marketing strategy and ultra-competitive pricing.
But the Australian connection doesn’t end there. While Specsavers is based in the British Guernsey and has close to 1,400 stores around the world, Doug Perkins is now based in Melbourne.
We did try and contact Perkins for an interview, but the Perkins are notoriously shy when it comes to talking about money.
Instead, they’ve focused on building a business – and perhaps just as importantly, a brand – that has allowed them to disrupt markets across the world.
The Perkins have one of those classic small-entrepreneur-made-good stories that inspires business owners around the world.
Doug and Mary Perkins met at Cardiff University when studying to become optometrists. After they were married they established their first chain of optometrists in the 1960s in Mary’s hometown of Bristol. The chain would eventually expand to include 23 stores.
In 1980, the business was sold for £2 million, and the pair moved to Guernsey, where Mary’s father had retired.
But the British Government’s decision to deregulate professions such as optometry – and allow these businesses to advertise their goods and services for the first time – created an opportunity. The couple decided to launch a new business from the table tennis table in their spare bedroom.
Specsavers grew quickly, starting with stores in Guernsey and Bristol, before spreading to Plymouth, Swansea and Bath. Within four years, there were 100 stores and by 1995 there were 300.
Two years later, the company expanded overseas, opening its first store in the Netherlands. Sweden followed in 2004, Demark and Norway a year later and Finland in 2007.
In January 2008, Dame Mary opened the 1,000th store in Holland, before travelling to Australia to open the first three stores here.
The chain’s expansion has been dramatic in Australia. Under managing director Peter Larsen – and with a very involved Doug Perkins – the group has targeted existing independent optometrists, converts from other chains and Australia’s relatively strong pool of franchise entrepreneurs.
According to leading research firm IBISWorld, in three years the company has grabbed about 18.5% of the market. Based on revenue projections in the prospectus provided to potential franchisees, revenue in Australia is around $340 million – well beyond the target of $200 million by June 30, 2010.
It’s that impressive growth that has lifted total revenue at the group to around $2.4 billion and sent the Perkins’ wealth through the roof.
So what are the secrets to the explosive growth? There are four: aggressive marketing, sharp pricing, strong customer services and a clever twist on traditional franchising.
Specsavers was born out of the opportunity for optometrists to advertise and it remains a marketing-led company. In Australia, the company’s launch has been accompanied by an avalanche of aggressive advertising, with the company spending just over $20 million a year to push its famous “You should have gone to Specsavers” slogan.
This heavy advertising has cleverly piggybacked on other well-known brands – Quiksilver, DKNY and most recently Australian fashioner designer Alex Perry – who are also trying to establish themselves in the ultra-competitive optical frames market.
But Specsavers’ marketing aggression has at times spilled over from the media and into the courtroom. The company has been involved in a series of court cases with competitors, accusing one rival, The Optical Superstore, of misleading advertising, and being accused of the same by chief competitor Luxottica, which owns the OPSM chain.
Specsavers even launched legal action against research company Canstar Blue after the company produced a survey giving Specsavers a poor rating in the optometry sector. Specsavers attempted to claim the survey methodology was defective and the results misleading, but lost this battle late last year.
Specsavers’ marketing is also unashamedly focused on price – the Specsavers traditional offer is two sets of frames for the price of one. Doug Perkins claimed late last year that Specsavers has managed to push optical prices down by as much as 30-40%, although competitors have refuted this. Whatever the actual number, Specsavers’ aggression has allowed it to grab pricing leadership in the minds of consumers very quickly.
One of the major things both Doug and Mary Perkins have focused throughout their careers is customer service.
“In the traditional optometrists, there’s just the technical guru in the consulting room and then a receptionist. These days people expect optometrists to be offering fantastic service, and I believe all this has been missing. People want an enjoyable experience,” Doug Perkins told SmartCompany in 2009.
Mary Perkins takes things a step further, as she explained in a 2005 interview with British newspaper The Times, touring British stores as a “mystery shopper”.
“I play an undecided browser,” she said.
“I just wait to see who comes up to me. I have to wear a wig, of course, because most of the opticians would recognise me. In fact, I’ve got rather a good set of wigs.”
The franchising model used by Specsavers is one of the most interesting parts of the company’s model and would appear to explain why the company has been able to grab so many franchisees so quickly.
Within Specsavers, franchises aren’t called franchisees at all – instead, they are “joint venture partners”. And the franchise agreement certainly isn’t a typical franchise agreement.
Instead, each store is jointly-owned by the company and the independent owner; Specsavers own “class B” shares is responsible for providing back office and marketing support, while the entrepreneur owns the “class A” shares, are a responsible for the store’s day-to-day operations.
The “Class A” shareholders get all the profit and Specsavers gets a relatively high share of turnover – about 19% of monthly turnover.
But the arrangement helps avoid what can be a problematic part of franchising – what happens when a franchisee agreement is up. Under the joint venture model, the independent owner decides when to sell.
Exactly how big Specsavers can get remains an open question. Australian boss Peter Larsen acknowledged late last year that the store rollout was slowing, but said the company would still like to get to around 300 stores by the end of 2011.
Doug Perkins, who lives in Melbourne for about 10 months each year, is likely to remain heavily involved in the company’s Australian growth, even as he approaches 70 years of age.
As Mary Perkins told The Times, Doug is an entrepreneur who cannot stop.
“Doug doesn’t really have any hobbies, he needs to work. I can see him in his 90s as a crotchety old man in his dressing gown, still holding meetings.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
