Leadership challenges – Belfield Group under new management

It’s November, and, in a meeting room at the Belfield Group’s headquarters in Ilkeston, Derbyshire, outgoing CEO Steve Hampton (pictured, right) sits beside his replacement, Gary Lasham (pictured, left). For Steve, it’s the end of an era, and, for Gary, a new challenge – but there are changes afoot across the upholstery, mattress and furnishings empire which promise to keep both (and some 2000 employees) busy, writes Paul Farley …

According to Gary, in no way is this handover a case of “out with the old, in with the new”. The pair share such an easy rapport – making good-humoured jibes and finishing one another’s sentences – that it’s hard to picture them working apart in the months to come.

Steve, who has managed the business since 2004, will leave quite the legacy. His affable yet detail-driven leadership has helped the group reach a turnover approaching £220m – not bad for a business that started out just two years beforehand as a manufacturer and supplier to the caravan and holiday home market.

Gary joined last April, embarking on a six-month handover process, during which he worked closely with Steve to understand Belfield’s place in the wider trade. Trained as a production engineer, Gary has worked on the corporate side of the automotive and packaging industries, and with blue-chip clients including Nestlé and Proctor and Gamble, among others. He’s overseen several MBOs, most recently selling to FTSE 100 business DS Smith. Needless to say, he brings a keen eye to the group’s operational processes, from procurement to fulfilment.

He’s also keen on sporting analogies, and might describe the pairing of the two as “a match made in heaven” – it’s certainly an example of fresh insight meeting established passion, and the result is a sense of confident continuity, despite their differences.

“I wouldn’t call Steve an ‘icon’ to his face,” jokes Gary, “but he is a significant industry player, and he’s very well respected. It was never going to be an easy gig to replace him. But we’ve spent a lot of time together – in the factory, on the road, over drinks – and we’ve become good friends. I feel privileged that Steve feels he can hand over the reins.”

Steve echoes the sentiment. “We’ve had a couple of false starts with handovers in the past,” he says, “but it’s been different with Gary. He’s a seasoned professional. He understands manufacturing, he’s extremely numerate, and, more than anything, he’s a good leader. And he loves the product.”

Both acknowledge that Belfield is in need of powerful guidance right now. Since its own MBO in 2016, the group went on to acquire heritage upholstery brand Tetrad in 2017, and last year it spent £1.5m establishing USleep, an expansion of its mattress production capacity. Yet Belfield, like the rest of the trade, weathered a difficult climate through much of 2018, and there’s a chance greater uncertainty awaits.

“It was a tough summer, and I don’t think anyone in our industry would say differently,” says Gary. “Steve has never seen times like it – and he’s been working in this industry for 34 years.”

“Last summer saw unprecedented cost increases, coupled with greater fall-off in demand than I’ve ever experienced,” agrees Steve, “all of which put huge pressure on our margins. It was a perfect storm. But these circumstances drove us to really drill down to the housekeeping details across the board. We carried out a value analysis programme, worked on our margin development and supplier partnerships, and basically scrutinised every product to make sure we’re manufacturing it in the most efficient way possible.”

Part of Westbridge’s huge manufacturing facility in Flintshire, North Wales

“It’s like the Sky cycling team,” adds Gary. “It’s all about the aggregation of marginal gains – 1% here, 1% there, and all of a sudden you’ve found 5%. We’ve really screwed down on every aspect – the right materials, performance, design, and optimisation in our production, supply chain, transport, everything. Of course, there’s always room for improvement, but we’re exiting 2018 a much leaner, fitter, tighter business than we entered it. As Steve, said, it’s the tough times that force you to do that.”

That’s not to say things weren’t up to scratch at the start of the year. “When I joined Belfield last April, I didn’t expect to encounter the sheer quality of data that’s in place here. One of Steve’s strengths is that he’s always been on the numbers. We know everything about this business to a couple of decimal places, and that attention to detail has really helped enable Belfield’s longevity and growth.”

“And the rate of change right now is such that we’ve got to be equally fleet of foot.”

Steve nods in agreement. “Fundamentally, success in this industry is all about being agile, because it changes so rapidly,” he says. “You can go from a three-week orderbook to an eight-week one in no time at all – and vice versa. The challenge is to maintain your level of output and speed to market without losing your entrepreneurship and creativity as a business.”

The Belfield Group certainly can’t be accused of standing still in this regard. Across the business, more than 70 product designers and developers juggle countless white label and independent demands.

The latter segment of Belfield’s customer base – which is growing, and now accounts for upwards of 15% of its trade – derives significant benefits from the team’s creative energies. And, says Gary, dealing with the independents gives Belfield insight into the drivers behind consumer tastes and what’s happening in the market.

“The independents give us authority, and they allow our designers to really express themselves,” he says. “Through the summer I’ve been present at some staggeringly successful design presentations, where I’ve quite literally seen clients’ jaws drop at what we’re doing for them, and the scale at which we’re doing it.”

The majority of these designers work within upholstery, just one of Belfield’s four divisions. Westbridge Furniture, which produces in excess of 10,000 pieces every week at its production sites in North Wales and Romania, is the UK’s biggest sofa manufacturer, and the engine room behind some of the high street’s biggest retail brands.

There’s also the upmarket Tetrad, which has benefited from investments totalling around £500,000 since it was acquired, plus expansion through new lines Spink & Edgar and Mulberry Home. As well as sharing Westbridge’s extensive design and development expertise, the brand has seen money channelled into its manufacturing capabilities, bringing it further into line with the benchmarks set by the former.

“We’re bringing the plant up to date so not only is it leading-edge from a design and product perspective, it’s up there in terms of manufacturing, too,” says Steve.

“It’s basically the Aston Martin story,” explains Gary. “For a time, they were producing cars where no two wings fitted in place – but it’s still a heritage brand today, because its manufacturing was modernised, without losing sight of the craft and passion that goes into each model.”

The next division is mattress production, which Belfield entered in 2009. Today, this purely white label business turns out around 20,000 mattresses each week through Duflex in Castle Donington, and USleep, a new production facility in Greater Manchester. Thanks to its experience of supplying the rolled, folded and vacuum-packed mattress marketplace, the division fast became a go-to manufacturer for various bed-in-a-box disruptor brands.

“That business has grown phenomenally,” says Steve, “and it is showing no signs of abating.”

“Mattress development and production is a very private and sensitive area,” adds Gary, “so having a new production facility means we can spread our customer footprint, and this gives them a lot of confidence.”

The group recently joined the NBF, with a view to playing a greater role in the bed industry. “We’ve got a big share of the market,” says Steve, “so it makes sense that we have a voice – and a pair of ears – in the trade, and play a more responsible role.”

The third division is Belfield Furnishings, principally a contract-facing business, and a reflection of the group’s roots. Boasting a 60% share of the UK holiday home and caravan market – plus a growing business in motorhomes – Belfield Furnishings stands head and shoulders above its competitors, and has the resources to ensure it stays that way.

Finally, there is Design Studio, which designs and produces curtains, blinds and scatter cushions –ready-made and made-to-measure – for independent retailers. It may be the group’s smallest division, but Design Studio plays an important role in gauging and steering emerging colour, pattern and texture trends.

The newest development here is a brand tie-up with Channel 4’s biggest-selling show, Escape to the Château. The show’s idiosyncratic co-presenter, Angel Strawbridge, has designed a licensed line of bedding, wallpaper and curtains, which Design Studio will launch at Spring Fair next month.

“I’m genuinely very excited about it,” says Gary. “Brand tie-ups are easy to buy into. I think they’re a great way to sell, and this one’s shaping up to be a key player in this sector. The future of Design Studio is all about our ability to spot trends, and share them with our independent and group customers. If this particular line is successful – and I have no doubt it will be – you can expect to see further collaborations in the future.”

The Belfield Group’s separate divisions share design and trend expertise

Across the breadth of these four divisions, synergies abound. From a design perspective, the four divisions share insight and innovations more extensively than ever, while customers benefit from the cross-pollination of ideas – for example, customers of Belfield Furnishings often look to Westbridge and Tetrad for inspiration.

Then there’s the group’s sheer scale. As one of the industry’s biggest buyers of fabrics and foam, Belfield can source the best prices worldwide, and at least two of its divisions can take advantage from each deal. “We aim to leverage our purchasing power and expertise whenever possible,” says Steve.

While Gary is keen to point out that each of the group’s components is a “fiercely independent business when it comes to the marketplace”, he acknowledges that the back end must be extremely well aligned if each brand is to succeed in doing right by its stockists.

“It’s extremely important that our brands remain independent,” he says. “You can’t keep close to your customers if you allow things to become too corporate – each business is a completely different animal, and speaks a different language within the wider group.

“But beneath that gently gliding swan is a great deal of activity in the harmonising of activities and opportunities. What’s the point of having design teams in each division that aren’t talking to each other? Much of it, from IT strategy and procurement to HR and health and safety, is boring but necessary, and we’ll start to operate more collectively in that regard – but not at the cost of the proud heritage of our independent brands.”

“We’re driving a host of benefits on the operational side that our clients just won’t see,” adds Steve. “Take cyber security, which is becoming a really hot topic for our clients – no-one sees the effort we’re putting into this, or asks how much we’re spending on it, but issues like that are vitally important to the longevity of any business.

“Then there’s handling the growing consumer demand for choice and instant gratification. Westbridge offers around 250,000 SKUs altogether – that’s what I call mass customisation! It’s a huge range, and what exacerbates it is that we’re dealing with virtually every high street player, and everyone wants an exclusive product. The trick has been to manufacture that breadth of products competitively, which means investment right the way through.”

All this hard work is paying off. Given the challenges the trade has faced in the last year, Belfield has emerged in an enviable position. Thanks to investment made in the summer, business picked up in Q4, and the group as a whole is entering 2019 in fine form. “We’ve weathered 2018 bloody well,” says Gary, “and we’re match fit – probably in the condition of our lives!”

Both managers are confident that UK manufacturing can prosper in the coming months, and are ready to explore various avenues of opportunity. “We’ll work on building product areas which are under-represented, whether that’s leather as opposed to fabric, or beds, sofabeds, or frames,” says Steve, “plus export growth through Tetrad.”

Meanwhile, Gary hints at possible acquisitions (in the UK and abroad), admitting that he would be “very keen to add to our portfolio of heritage brands”.

“To be honest,” he continues, “we’ve got a few very significant projects we’re investing in at the moment. Throughout 2019 – and beyond – I expect our customers to notice a greater focus on innovation. What we’re doing with Design Studio is a foray into a whole new licensee marketplace – so what’s the next range likely to look like? And why wouldn’t we develop ranges with keynote designers?

“Alongside that, we’re going to be launching exciting new products at a continued pace, at the January Furniture Show, and beyond. And there’s a lot of thinking going into sustainability – how we supply our products and what goes into them. That’s going to be on everyone’s agenda, and I can certainly weigh in on the packaging side of that development.”

Rather than making an entirely clean break from the company, Steve will be picking up several of these projects, and will be “at the end of the phone” should Gary need any further advice.

“My most important job in the first six months was to listen,” says Gary. “I spent a lot of time out on the road with our salespeople and designers, talking to our customers and listening, listening, listening. Trying to grasp Belfield’s DNA has been the most intense experience. Manufacturing, IT and finance, I understand – but the wider dynamic between products, ranges and brands? I’m getting there …”

Steve has more faith in Gary’s abilities, and in the outlook for the Belfield Group as a whole, as he bows out on a note of optimism: “I worked with Christie Tyler when we had a 40% share of the upholstery market – and, if you look at where Belfield is now, we’re probably the biggest player, and we’ve only got 5%, maybe 6% of it. It’s incredibly fragmented, which means plenty of opportunities for consolidation.

“However Brexit goes, UK manufacturers have a unique opportunity. Provided we can continue to be productive and well invested, there’s no reason we can’t continue to prosper.”

At the January Furniture Show, Westbridge will be present on stand 1-D80, and Tetrad on stands 1-G90, 1-F90 and 1-F85. Design Studio will exhibit at Spring Fair, on stand 1J18-H19.