The mystery man behind the purchase of troubled store chain Howards Storage World has been revealed.
New owner Enayat Ghiasi has been Melbourne based for a few years but brings extensive retail experience from running 85 stores in the United Arab Emirates.
He offers particular value to the business, says his newly-minted chief operating officer Ron Pugsley.
In an interview with Inside Franchise Business, Pugsley (a long term and ongoing franchisee) revealed Ghiasi first approached Howards Storage World in winter 2016, but at the time was unable to come to an agreement to purchase the business.
The successful 2017 purchase has been part-funded by Ghiasi’s connections in the UAE.
Two businesses now own HSW, one holds the assets, the other is the operating company to buy and sell product.
“Most of our target customers tell us we are their favourite store. We merchandise well, and there’s a lot of experience at store level, and skill,” said Pugsley.
So what went wrong to cause the chain to go into voluntary administration?
It was a case of overpricing, he said. “The previous administration destroyed the overall value proposition; one of the key concerns for customers is competitive prices.
“In the value chain they were taking over-exercised margins and passing that through to the stores. We have to be price competitive, we lost focus.”
The business will revert from direct sourcing of product to the original model of relying on local suppliers to find product and unique offerings.
The business was offering the wrong product at the wrong price point. It was also ignoring franchisee expertise, Pugsley said, but this will change.
“We want to pull down barriers and get an even flow of communication and get ideas from franchisees. We need to mine this knowledge. We’re going to capitalise on it.
“We’ve got a busy 18 months to get everything on track. After we’ll look at opportunities to expand.”
Out of the 59 stores that were in the chain when it went into administration, all 29 franchised outlets remain. The company has closed 12 of its 30 corporate stores. Some company owned outlets will remain but as the business footprint expands if the right franchisee matches the right location, corporate stores will be franchised.
The perfect combination which delivers franchisee profit is the driving force: “If we can find the proper location and the right price to offer tremendous service to a large catchment, and a franchisee can make a profit.”