Julian Richer had barely begun as an entrepreneur when he had to surrender ownership of his fledgling company, the British high-end audio equipment retailer Richer Sounds.
It was 1978 and Mr Richer, aged just 19 and having made “a couple of grand” selling reconditioned record decks, had his eye on the lease to a small shop on a shabby walkway close to London Bridge station.
“It had 35,000 wealthy commuters [passing by the shop] going into work in the morning,” Mr Richer recalls. “I just saw the potential.”
The landlord was willing to sell the lease premium-free, but wanted a 74 per cent stake in Richer Sounds, partly, Mr Richer laments, because he lacked faith that a teenager could make a go of it. “I remember him looking at me up and down, like he was thinking who the hell are you.” Mr Richer reluctantly agreed to the deal.
Mr Richer, who turned 60 in March, recalls the story at a breakfast meeting in his “global headquarters”, a snug alcove in his favourite Mayfair restaurant, Richoux.
He opened that first Richer Sounds shop 41 years ago, and the success of the business — which now has 53 branches. The original store is listed as a Guinness World Record for having made the greatest sales in relation to its area of store space than any other retailer, a record dating back to 1994.
His success enabled him to quickly buy out the landlord’s stake but Mr Richer still grimaces at the memory of the lease deal. In May he again surrendered a controlling share in Richer Sounds, selling a 60 per cent stake for £9.2m. This time, however, he was calling the shots. The plan, revealed in an interview with the FT six years ago, was not about personal enrichment, but to turn Richer Sounds into an employee owned trust (EOT).
“This is my life’s work,” Mr Richer says, adding that he and his wife have no children to pass the business on to.
“My dad dropped down dead at the same age as I am today. My greatest fear is that the same happens to me and this gets taken over by venture capitalists, who will mess it up.”
The stake sale will not affect the drive to generate profits, he adds, noting that this year’s sales revenue of almost £200m was a record.
Material gain is a key part of the Richer Sounds story. At 23, Mr Richer bought the first of several Rolls-Royce cars, although he admits that this was in part due to an inferiority complex acquired as a boy at boarding school. “I had a chip on my shoulder about the limos the fathers of other kids would arrive in at school,” he says. “I made my dad park his old Renault around the back.”
His materialism has softened, he notes, since he rediscovered his Christian faith and was baptised as an Anglican in 2006.
Mr Richer’s entrepreneurial epiphany happened in 1982, when he read In Search of Excellence, the business bestseller by Tom Peters and Robert Waterman.
The top performing companies in the book had two distinct qualities, Mr Richer notes: They treated both their staff and their customers well. It was a revelation for a man who seems drawn to simple truths. “Most people you meet are decent and, if you treat them well, they’ll treat you well back,” he says. “This is not complicated.”
What this means in terms of leadership at Richer Sounds is a focus on engaging with staff and customers. “Every night, if a shop has good figures, I email them saying, guys, great figures today, well done, you’re the jewels,” he says. “All bosses, me included, don’t say thank you and well done enough, but it means a hell of a lot to people.”
The company rewards staff monthly at the best performing store by handing out “loads of money” to recognise employee loyalty and people going the extra mile in sales. Annual staff turnover is less than half the average among UK retailers he claims — helping the bottom line.
Shrinkage, a retailing expression for inventory loss because of shoplifting or employee theft, is another key metric for Mr Richer. “In British retail that’s between 1 and 2 per cent, but we lose less than 0.1 per cent,” he says. “We’re saving millions of pounds a year by our staff not stealing from us.”
The creation of the EOT means Mr Richer is now an employee too. He receives a salary of £60,000, “what one of my store managers could earn”, but with an unlimited unpaid holiday entitlement. “I have still got 40 per cent of the shares, so when there’s a dividend I’m still going to get loads more money,” he says.
There is more to the company’s success than just caring for staff. The business owns all but five of its shop leaseholds, cutting overheads to about 12 per cent of sales, a level Mr Richer claims matches the biggest online retailers. The products they offer, top of the range televisions and the kind of equipment only audiophiles buy, is hard to sell effectively online, Mr Richer adds.
“Do you know what a sound bar is?” he asks. He notes that each of his stores stocks at least 10 different lines of these specialist television speakers, which customers can listen to in store in a private room before they buy.
“You’re not going to buy that from Amazon because you can’t hear the difference,” he adds.
Richer Sound’s survival will depend on seeing off the threat of online competition as well as getting the new ownership structure right.
Although stepping back from Richer Sounds will be a “gradual wind down”, Mr Richer is already reinventing himself as a campaigner for better corporate leadership. He set out a manifesto for the way he thinks bosses should behave in a book last year, called The Ethical Capitalist.
“I am sick of reading about dreadful entrepreneurs, treating their employees badly and not paying their taxes,” he says. “I don’t believe it works in the long term and it gives us all a bad name.”
Entering his seventh decade has not dimmed Mr Richer’s terrier-like drive to succeed.
He might no longer own the majority of his company but he clearly still relishes being the boss.
This article has been amended since publication to reflect the fact that is one of its stores that holds the Guinness World Record for most sales in relation to selling space, not the whole chain.
Three questions for Julian Richer
Who is your leadership hero?
It would have to be Archie Norman [a retail turnround expert]. I am in awe of his intellect, work ethic and integrity and I love the fact he can be a little eccentric too.
If you were not a CEO, what would you be?
Minister of State for Prisons and Probation with a decent budget to both treat offenders with dignity and to attempt to rehabilitate them.
What was the first leadership lesson you learnt?
I opened the first shop with my friend, who is still a friend today, but we had a rocky patch because when you employ your friend it can be very difficult.
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