Despite low consumer confidence and Brexit, independent agencies are re-energising Britain’s lacklustre high streets. James Chapple reports.
They’re small but perfectly formed: travel’s miniples are booming, and they’re proving one of the sector’s most resilient elements.
While times are tough amid the ongoing Brexit malaise, three independent agency chain leaders have told TTG there has never been a better time or chance to make a success of bricks and mortar.
For all the warnings the internet would sound the death knell for the high street, conscientious and community-focused agencies – aided by government rate reliefs, bargain property and major players like Thomas Cook hitting the headlines for the wrong reasons – are continuing to thrive.
The growth of the miniple – widely accepted as travel agencies with five to 50 branches – is none more evident than in south Wales and along the Welsh border, where a slew of new openings has made travel agencies a focal point of depleted high streets.
It is Don Bircham, managing director of Hays Travel North West, who perhaps summarises this new-found optimism most succinctly. “We can now compete with the multiples – we don’t have to hide around the corner from them any more, we’re right in the mix with Cook and Tui.”
Hays Travel North West started life 20 years ago in Mold, north Wales, as Just Go Travel. However, it was after a 10-year spell as a Tui franchise that Hays Travel founder John Hays invested, giving Bircham fresh impetus to more than double the size of his business over the past four years with the Hays brand above the door.
Bircham is confident of hitting the 40-store mark by the end of the year – new branches in Northwich and Oldham are ready to go as the business expands into Lancashire and Greater Manchester, while the Hays name will soon arrive in Shrewsbury. Two or three more openings are “in the pipeline” as well, reveals Bircham.
“The demise of the high street has provided an opportunity for us,” he explains. “Those units that five years ago were going for £50,000 [annual rent] can now be secured for £30,000. This has made a huge difference. There are now good, primary sites available in our town centres.”
One key factor for Bircham is the government’s two-year (2019/20 and 2020/21) business rate relief scheme for units with a rateable value of less then £51,000.
“It helps that many of these shops fall under the scheme,” he says. “The downside is there’s no security – it would be great if they could give us some certainty and extend it. It’s helping nudge some property deals over the line. It’s a big part of our development plan.”
Bircham adds businesses like Hays Travel North West have benefited from a lack of investment by multiples in small market towns and town centres.
“A lot of the activity does seem to be in Wales, the North West and the Midlands,” he muses. “I don’t know why. I don’t think it’s one particular issue, it’s numerous things that have come at the same time.”
“We can now compete with the multiples – we’re right in the mix with Cook and Tui”
Mark Johnson, operations director at Polka Dot Travel, echoes Bircham’s sentiments, particularly on rate relief. “We’ve been able to go into towns with big catchment areas we may not have looked at,” he tells TTG.
Polka Dot sprang up in Shropshire six years ago and has quickly grown to 14 stores. Four more – Mold, Lichfield, Cannock and Leek – will open shortly, and Johnson reveals the business is in talks over another two or three.
“I’d expect us to have them open by Christmas so we’ll go into January with 20,” he says. “We’re targeting 30 by the end of 2020.”
Polka Dot expects to achieve £35 million turnover by October and grow this to £50 million by the end of October 2020.
“It’s largely organic growth, but we would definitely consider acquisitions too,” Johnson continues, remarking on Polka Dot’s rapid expansion into the Midlands, now with the support of a dedicated regional sales manager.
“It’s a huge population waiting to be served,” he says. “I think we can go in and make a real difference. We’ve got our eye on a lot of towns. We’re happy to move around. We want to build the business to 50 shops.”
From one location to 20 in less than seven years is not without its challenges, Johnson admits. “Trading is up about 8% this year. We’re outperforming the market and we’re beating our targets. But we’re definitely not walking it. It’s really tough out there.
“Brexit has definitely had an impact. People aren’t flooding through the doors so we’re having to work really hard to generate enquiries and convert them. It’s been a difficult year, so to grow this year is really encouraging.”
Making the best of tough times though, Johnson sees the current economic and political climate as another opportunity to grow.
“There are some good deals on the high street – rent and leases,” he says. “Landlords are getting rid of property and taking offers much lower than they were six or seven years ago when we started.
“The government’s rate relief has helped too. We’ve been able to negotiate some great deals in these places, and it gives you time to get established in a new location.
“Getting the right people is absolutely critical too – we will delay opening a new store until we get the right staff.”
For Miles Morgan, who started his business in 2006 and now operates 16 (soon to be 17) stores, the rise of the miniple in south Wales may well be a reaction to there being a lack of independents in the first place.
“If you wind back five years in south Wales, there was nowhere near as strong an independent agent community,” he says. “I think there was a gap for it to happen. It’s probably more a correction than anything else.”
West Wales has long been served by Travel House, which now has 20 stores, and in recent years Tailor Made Travel has rapidly expanded to nearly 20 agencies. With Hays Travel and the Co-op also operating in the area, Miles Morgan Travel has expanded into Wiltshire and the south-west; its next agency will be in Devizes, while its Yeovil store will relocate to larger premises.
“I’m a great believer in going the opposite way,” Morgan explains. “I opened my shops in 2006 when the internet was growing; everybody was going online. We’re at the point now where you can’t open a paper or go online without seeing a negative story about the high street. That presents opportunities to get locations you couldn’t have dreamt of 10 years ago.”
Like Bircham and Johnson, Morgan hails the government’s rate reliefs, but stresses his business has always sought to set itself apart from other agencies. “When I was a high street agent working on the counter myself, you were primarily a footfall business,” he says.
“Thankfully, we’re a destination shop. People come into town to see us. We’re not reliant on footfall any more because being a high street agent is as hard as it has ever been. I’m thankful we have appreciative customers who we attract not through price, but through service.”