Part 8: Unemployed !!

1978 - it’s a few weeks before Christmas - Matthew James Wholesale has CLOSED DOWN - in liquidation. I am living in a freezing cold flat above the old premises in Upton Lane, Forest Gate. No job - no money - how had it come to this when just a few months ago we were flying high - a success story for the industry.

Matthew James was the third largest wholesaler of Moulinex products in the UK, A major supplier of small appliances in the South East. First in the UK with Braun and Zanussi products. Less than 2 years since (in addition to Upton Lane) we took larger premises at London Road ALL GONE - ALL LOST !

This is of course my version, others might offer a different account of events, but I think I have it about right.

It all began early in 1978 when Philips Electrical announced they were raising finance to purchase Norelco in the USA. As a part of this fund raising, they were pulling out of the wholesale market in the UK. I have not been able to trace why or when Philips originally invested in the wholesale sector of the UK market, but I assume it was to gain distribution by ensuring their product was always on offer.

I presume they had a holding company for these UK assets, through which they had a controlling shareholding in several “multi-branch” electrical wholesalers that between them covered the whole country. Robshaw Brothers, E R Harveysons, and I think Swift-Hardman? were all part of this wider group, but each operated independently.

At first I thought the “withdrawal” was good news. We were direct competitors in the small appliance market, and the Philips groups “throwing in the towel” would open up more opportunities for growth.

The reality soon hit however as all the Philips group wholesalers started to discount stock. At first fairly modestly, but fairly quickly it ramped up as they realized that to clear the vast stock holding the group had, they had to cut deep.

Soon they were selling close to our buying prices, and customers deserted us in droves. Weeks went by with our turnover falling, then they reduced prices again - now selling BELOW COST. It got to the point that when we did require to top up any stock from Braun, Philips, Moulinex (and many other suppliers) it was cheaper for us to buy from one of the closing wholesalers - than direct from the manufacturer.

We expected (and so did our suppliers) that this would be a short lived problem. In the meantime we had Bills of Exchange coming due, and no cashflow to pay them. The “big 3” B, P, & M had a solution for this. Their reputation was at risk if bills of exchange they had “countersigned” failed to be paid. As the “Bills” became due they simply transferred the due amount into our bank, the Bill was paid - and they re-raised a new Bill for 90 days later. That should have been enough to solve the problem but “the sale” went on and on.

As mentioned in a previous issue, we had never had any capital introduced into the business - so no reserves to pay rent, wages, services, and other miscrllaneous bills that were always coming in. We were now clearly insolvent and sales near zero. The Bills of Exchange were rolled over one more time, but it was clear now we were dead in the water.

We had always had excellent relationships with the credit controllers:

Braun: Peter Walker, Philips: Dick Scales - Steve McAvoy, & Moulinex: Bernard Goode

So I decided to call a Staff and Main Creditors meeting to discuss the situation.

One evening I drove to the head offices of these big three and deposited a letter notifying formally this meeting for a few days’time.

All the staff and of course B, P, & M were well aware of the situation - so the meeting was a glum affair, and no one had any answers. Ian Kyle and I were the key players at this time as Jeff & Brian had left a year previously (see note) for reasons unrelated to this nightmare situation.

It was clear that the major creditors had no appetite for closing us down, but equally that we were trading whilst insolvent.

Ian’s mother stepped in with a loan to the company that Ian & I took as a personal liability.

Time for one last desperate throw of the dice. As mentioned in the last issue, I had been reading about giant franchise operations in the USA, Ben Franklin Stores, Coast to Coast and Household Finance Corporation (HFC).

At this point in time, Ken Oughton (ex Strydex - see part 2) was working with Matthew James and it was decided he and I would fly to the USA to see if any of these groups might be interested in acquiring MJ as a springboard for growing a UK franchise.

We managed to get appointments booked, prepared a business plan and off we went. We flew into New York on the 6th Oct 1978, and over the next few days drove across to St Louis and then up to Des Moines.

Coast to Coast had over 1200 stores and despite its name, mainly operated from California to Ohio. A unique chain in that all the stores had the same layout of 12 departments.

Ben Franklin stores had over 2500 stores nationwide.

What we did not appreciate at the time was that both groups were ultimately owned by Household Finance Corporation (HFC) a company founded in 1878 by Frank MacKey of Minneapolis, Minnesota.

We had meetings with all three companies, but the only one that held out a glimmer of hope was the HFC meeting. We were told they had an executive in the UK (based in Slough) who would be in charge of the groups UK strategy.

A meeting was arranged with this executive (I have not been able to recover his name) for 2 weeks ahead, and we flew back to the UK.

At the Slough meeting with this really nice chap (who I think was the Founder of what became HSBC), we were told that we were “too early” with this proposal, it might be the sort of thing they would look at in a year or two’s time.

Our creditors and bank made it clear they did not want to be the ones to “pull the plug”, so we had no choice but to “invite” liquidators in, and the companies fate was sealed.

The Auction

I only attended the stock selling auction for a couple of hours of its two day process. I think the company actually lost more money in that two days than in the months before. Hairdryers such as the Moulinex 162 that we paid say ￡2.00 for were sold off at 0.50p

Early in the story of Matthew James, I mentioned the important role that a hairdryer (HLD 5 from Braun) had played in launching the company, so it seems appropriate to end with another hairdryer!

It is also ironic that I would have never got started in Mare Street without the help of E R Harversons - a Philips owned wholesaler, and now with Philips closing down Harveysons (and it sister companies) the business came to an end.

I would soon leave East London, but I must mention two pubs I occasionally visited that really stood out from the crowd.

Dirty Dicks

In the 1970s Dirty Dicks was a real experience. “Spit and Sawdust” had a real meaning then, with sawdust on the floor and the 1000s of business cards on the wall.

Dirty Dicks on Bishopsgate dates back to 1745 when it opened as ‘The Old Jerusalem’ pub.

Dirty Dick’s real name was Richard Bentley, (or some say Nathaniel Bentley). Bentley was a successful and prosperous city merchant who owned a warehouse and a hardware - ironmonger shop in Leadenhall Street. The young Bentley was known for taking close attention to his looks and appearance and was pretty popular among the ladies. He even earned the nickname: “The beau of Leadenhall Street”.

Everything changed, however, on Nathaniel’s wedding day. In the morning of his wedding, he received the most terrible news imaginable: his fiancée had died. Bentley was a broken man.

His emotional breakdown went so deep that he never again took off his morning suit, and refused to clean anything, including himself.

He locked the wedding reception room and didn’t allow anyone, including the landlord, to enter or to clean the warehouse and he never again cleaned any part of himself either. When his cats died he just left them.

The myth says he left the wedding table untouched for decades, leaving everything on the table to rot and acquire dust forever.

The dirt accumulated over the years, cobweb covered everything, and rats and cats died on the floor, but Nathaniel still refused to let anybody in and clean. The warehouse turned into a dirty den and even letters were addressed to “The Dirty Warehouse London”.

Nathaniel Bentley and his warehouse became a tourist attraction, and he got the nickname ‘Dirty Dick’.

Despite of his astonishing transformation from “the beau of Leadenhall Street” to Dirty Dick, Nathaniel remained a polite and well-mannered man.

When Nathaniel retired in 1804, the landlord of the Old Port Wine Shop in Bishopsgate, bought the contents lock, stock and barrel including dead cats. He put them on display at his pub and renamed it 'Dirty Dick's'. In 1870 the pub was rebuilt from ground level, the wine vaults are part of the original building.

Charles Dickens was fascinated by Nathaniel’s story, and it is widely believed that Dirty Dick inspired the character of Miss Havisham in Great Expectations.

The Spotted Dog

The Spotted Dog in Upton Lane dates back to the late 15th century, and is thought to once have been a hunting lodge for King Henry VIII.

Leopold Wagner's 1921 book A New Book About London writes of a "huge barn like structure in the vegetable garden ... (of the pub) ... (which had) ... anciently enclosed the kennels for a pack of royal hounds". He asserts that when Henry VIII followed the chase in the Essex (Epping) Forest, he "took up the hounds here at Upton" about a mile from the tollgate which subsequently led to the residential district being named Forest Gate.

The Spotted Dog was at the time the residence of Henry's Master of the Hounds, who was granted the privilege of taking personal profit for refreshing travellers passing that way.

Until the First World War, the Spotted Dog "stood alone among the inns of the country at large in having its licence direct from the Crown," adding that: when Daniel Defoe referred to it in his History of the Plague in London ... when ... (in 1665) ... those able to escape came to encamp in the fields round about, and again after the Great Fire the following year."

The Spotted Dog has been closed since June 2004, and is now in a state of serious disrepair. Before Covid struck, it was thought it would be renovated with a new hotel attached to it. Anyone know anything about this?

Note: Brian Boatwright joined Matthew James on a “one year sabbatical” from the civil service. His career there included a study of how new technology would impact UK employment, which took him to Japan and other far-flung locations. Brian will join me again in other projects in the future.

Jeff Frankling decided he wanted to use the Upton Lane premises (which we had retained) to try out a retail concept called “Everybodys” (no photos found), which was a mix of housewares and electrical goods. When Matthew James closed down, and the lease was lost, he took up a new career in Non-ferrous metals - copper & brass. Jeff also will joined me again for an experience in Franchising before starting his leaflet distribution company Dor2Dor.

Ian Kyle (I believe) went on to have a long career in Insurance with Zurich. Ian I have tried to locate you on previous occasions, I will now try again, Jeff and I would love to renew contact.

Random Memory:

In the Summer of 1976, Ian Kyle & Brenda Grindrod were married in Brenda’s home town in the North of England. As is normal with weddings, a lot of frantic last minute arrangements had to be made to get everything in place. One of these was the collection of a car Ian had hired for the start of the honeymoon. It was agreed that I would drive Jeff to the car hire company, Jeff would “pretend” to be Ian for the purposes of picking up the car, and we would drive back - naughty, but simple!

Excruciating Interview: We arrived at the car hire desk staffed by 2 young ladies and the paperwork was commenced. Jeff handed over Ian’s driving licence and was asked to confirm his address - no problem. Jeff was then asked his date of birth - SILENCE - (Jeff had no idea - and I was no help), after much mumbling and looking at the ceiling - sorry my mind has gone blank.

“No problem” says the girl, I can get it from the driving licence. She looks up and says to Jeff - But its TODAY , your BIRTHDAY is today!!!

Well you can imagine how excruciating this moment was - I could feel the hole we were digging, getting deeper and deeper by the moment…..

“I offered” - Ian is getting married today, so he’s in a bit of a state.

Amazed, the girl said “getting married on your birthday and you can’t remember…..”

Fortunately the torture ended at this point - the car was ours!

I think “drive carefully” were the last words we heard - I bet she was worried they would not get the car back in one piece!

“Why didn’t you tell us it was your birthday” was the first thing we wanted to know from Ian. He looked confused - oh the driving licence, no it’s not my birthday today, that’s an error!

What a freak event that the error date on his driving licence was the same date as his wedding - you have more chance of winning the Lottery!!!

Observations for the young:

Just 12 years after arriving in London and starting employment with Strydex,I had completed a full circle from unemployed, employed, started a small business (shop), grown it into a substantial wholesale business, and then lost it - and I was back unemployed. What might be learnt from this period?

1) Speak up, voice your ideas. The young are not encumbered by things that failed in the past. Showing you are actively interested in the business will bring rewards.

2) If you want to start a business, youth can be a real advantage. No one expects you to have any assets (like a house) to offer as security, and generally there is a lot of goodwill towards young entrepreneurs - competitors don’t recognize you as a threat and will talk to you (perhaps even help you). You don’t see the (often self imposed) limitations and boundaries that hold established business back.

3) Although I started out as retail, I quickly saw advantages in being wholesale. You are what you say you are! I printed some letterheads and I was a wholesaler. As will be shown in later issues, on several future occasions, I set up a parallel “wholesale” operation to feed retail outlets with little or no resistance from suppliers. For one particular deal, I needed to be an “exporter” exporting to a country that the supplier did not already have distribution in. A suitable letterhead and a request for a sample order got me what I wanted.

4) in the period referred to “LinkedIn” did not exist, but the value of personal contacts has always been there. Be kind to everyone - a junior team member today may be the boss you are hoping to sell to one day in the near future! Meeting someone in person will always trump any other form of communication (including LinkedIn), so go to all the events you can, take plenty of business cards.

5) Cashflow is King - I must have spend hundreds of hours adjusting cashflow sheets by hand (with a pencil and rubber) to manage a shortage of capital - that work can now take just minutes with tools like Excel, and the overview it can give you of the business cannot be overvalued.

6) Think outside the box - be a lateral thinker - never be a “yes” person.

7) Value your team members and be a good listener. I admit I struggle a bit with the “listening” part - I tend towards being impatient and interrupting the flow - sorry!

8) If you are just starting out - remember if it all goes wrong you are unlikely to be any worse off than when you started, and the experience you will have gained will be invaluable whatever you do next. Sadly this may not apply if you start your first or subsequent business at a later age - creditors and particularly banks expect security, business plans, relevant experience etc. You are only young once - USE IT.

What next?

So Matthew James is over, but it was not the end of my retailing / wholesale experience. In 9 years time (1987), I am back in retail - and by 1992 with 88 company retail shops, and 21 Franchisees with a turnover of over ￡25M & over 500 staff. Before that however there is another adventure to be had…. with :

Raye Elliott Associates - Premier Franchise Consultants