At the LAI London Chapter Lunch on 17th April 2008 Ian Wallis gave us a fascinating insight into the development of a niche retail market: sex-related products. He charted for us the progress in business terms from a purchase in bankruptcy in the 1960s to a trans-UK and increasingly international presence today. In product terms, the progress has been from “men in macintoshes” to “a neighbour of Marks and Spencer’s”. This progress reflects, of course, the acumen of the Company’s owners, but also the transformation in mores during that time, a transformation in which Ann Summers played a significant part.
The business has had three strands. In the early days, it was very dependent upon ‘party retailing’; in a close analogy with Tupperware, the products were sold at female-only parties. Items not sold at parties were then passed to a small number of shops. In the 1990s the shop side was increased, to around 153 today. To achieve this was a considerable battle against entrenched attitudes by most large property owners but, Mr Wallis assured us, this has largely gone now – and no doubt the market troubles today will accelerate this growing ‘enlightenment’. Finally, in recent years, Internet selling has also become, not surprisingly, a major line for the business.
Part of the transformation in attitudes has been delivered by prudent management of product lines. This was given a boost by the purchase in 2001 of the Knickerbox chain. There is also an emphasis on developing well-known and trusted brands. Store layout and size has also been a key ingredient. Stores are now in the region of 1400 – 2000 sq. ft, with the latest, in Cardiff, being 4000 sq. ft. Layout design is intended to ameliorate the ‘embarrassment factor’, which is still a feature for many shoppers, while also preserving a degree of ‘theatre’ in the customer experience.
Some forays into fringe activities, such as vending machines and Ann Summers’ mobile phone ring-tones are being attempted. Franchising is not presently under consideration because there is considerable evidence of ‘cannibalisation’ when new stores are opened. This suggests to the writer that, despite the novelty of the products, demand is rather inelastic, if you will excuse the allusion. Ann Summers also appears to have been able to see off direct competition. Whilst a number of attempts have been made at the frilly underwear part of the range, there is no High Street competition in sex toys. Perhaps this points towards a business tension between creating more socially acceptable products, which might attract competition, and sticking with the less acceptable, which may frighten off competition.
All-in-all, Ann Summers seems to be textbook example of business creation and evolution in a ‘virgin’ area of activity – if you see what I mean. Ian Wallis gave us some very valid and enlivening insights.
Y’r O’b’d’nt Scribe