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How Hugh Man helped CeX achieve roaring trade across the globe

Written by Josh Russell, Emilie Sandy on Wednesday, 07 February 2018. Posted in Interviews

With Hugh Man heading up its franchise wing, second-hand retail franchise CeX has gone from strength to strength and now has over 550 stores around the world

How Hugh Man helped CeX achieve roaring trade across the globe

Few will be shocked to hear that Hugh Man, franchise founder at CeX, the second-hand entertainment franchise, isn’t a huge fan of our throwaway culture. “We’ve got to change this disposable world that we live in,” he says. “We’ve got to stop just throwing stuff out.” While some people seem to buy a new smartphone more often than they buy new socks, Man evidently doesn’t feel this is an irreversible trend. In fact, he has made his livelihood encouraging consumers to unlock the value of their electronics and allow others to access tech at a fraction of the price. “What’s no good to you is perfect for somebody else,” he says. “And that gives us a big market in terms of what we do with this stuff.”

However, when Man was a boy growing up in Fulham these grand plans couldn’t have been further from his mind, although he had plenty of chances to rub shoulders with successful people. His father ran a Chinese restaurant around the corner from Stamford Bridge, the home of Chelsea Football Club. “Obviously I was a Chelsea supporter as a kid,” he says. “The squad used to come to my dad’s restaurant if they lost at home: that was the highlight of my week.” Despite this example, Man admits becoming an entrepreneur wasn’t exactly high on his agenda – although he certainly wasn’t beyond the occasional money-making scheme. “At 12 or 13, I bred rabbits and sold them to pet shops for pocket money,” he recalls. “But at that age I probably didn’t know what entrepreneurialism even meant.”

Instead much of Man’s energy was invested in trying to make up ground academically. “Due to a childhood illness, I missed a lot of primary school, virtually all of it,” he says. “I didn’t know my alphabet until I was like 11 or 12.” Gaining significantly on his peers during his teenage years, Man found he had a real flair for design and began to aim for a career as an architect or civil engineer. However, his focus on more technical disciplines at A-level ended up proving problematic: finding he had too few qualifications in academic subjects to enter a bachelor's course at university, he opted instead to enter a higher national diploma (HND) programme. “Our managing director Dave Mullins often reminds me that HND stands for ‘have no degree’,” he laughs. “But it allowed me to skip the first year at uni, so I went into the second year doing civil engineering.”

After completing his second year at South Bank University, Man decided to take a short break to earn some money selling mortgages and insurance – although this brief interval quickly became a longer one. “Basically I made a bit of dosh and thought ‘hang on, I’ll take a gap year then go back to uni with a bit of money and do it in style’,” he says. “I never went back.” And as things transpired this was rather fortuitous: it was while Man was working in the industry that he first met his future CeX co-founder Robert Dudani. “Bobby was a newbie so we kind of clicked: I showed him the ropes and we spent a lot of time together, mostly in pubs,” he says. “And after we left the mortgage broker, we actually became very good friends – or more like brothers: we supported each other quite a lot through highs and lows.”

Not long after leaving the mortgage broker, Dudani began working at a second-hand retailer. And not only did this introduce him to another future CeX co-founder, Paul Farrington, but it also gave the friends direct insight into some of the industry’s worst practices. “They treated people who were selling things very badly: they would scratch their heads, give them peanuts for their stuff and then sell it for a massive margin,” says Man. “That was typical in the second-hand retail business at the time.” Recognising that this wasn’t offering customers a great experience, the co-founders began to discuss the idea of setting up a second-hand entertainment store that offered the public better payouts for their possessions. “We had the vision that we could do a lot better by treating both the buyer and seller equally,” Man says. “And that’s how CeX evolved.”

Once they had added the customer-service expertise of Oliver Ball to their team, CeX’s co-founders pooled their resources and got to work – although Man admits they were hardly blessed with a great bounty. “We had about £4,000, which is not a lot of money, and a bunch of stuff from our houses: all our Nintendos, Commodore 64s, bits of printers and video games,” he laughs. While many of the consumer electronics stores were concentrated around Tottenham Court Road, the CeX co-founders knew their budget wouldn’t stretch to that so they instead found a backstreet location near neighbouring Warren Street station. Fortunately, being such good friends meant that getting their first location open wasn’t too onerous. “In a small store, you’re like a little family,” says Man. “We took it seriously and knew what we needed to do but we probably had more fun than we should have done.”

Despite this, attracting customers to the new brand and drawing in sufficient footfall wasn’t exactly straightforward. Fortunately the CeX co-founders had a little help from their young sales assistant who showed a keen wit and remarkable prescience. “He was this wannabe cartoonist who sat behind the counter, made people laugh and produced this really cool, funny cartoon on an A5 flier to promote what we did,” says Man. “You’ll recognise his name: Charlie Brooker.” While this was many years before Brooker’s success as a writer, producer and creator of anthology sci-fi series Black Mirror, he still clearly knew how to capture the public’s imagination and soon CeX’s first store was filled with consumers looking to buy and sell electronics. “From having nothing, we started to have the latest stuff because we were giving customers fair values for their possessions,” Man says. “And for the next year or two, every penny went back into things like stock and marketing.”

And by reinvesting its revenue in this way, CeX soon had more than enough resources to open up a second location, setting in motion a trend of organic growth that continues to this day. “We saved up, trained up managers and opened another store, then saved, trained managers and opened another one and so on,” says Man. “That was it: we just kept going.” Once the business had built up a significant presence inside the capital, the entrepreneurs decided the time was right to open their first store out of the city and launched their new location – in Harrow. “Don’t laugh: as far as we were concerned at the time that was outside of London,” Man interjects. And before long the entrepreneurs were preparing to properly fly the nest and wing their way up the M40. “We left some trustworthy guys behind and myself, Bobby and Paul all piled off to Birmingham to open a store,” says Man. “And from there we just kept opening stores and building stock.”

CeX wasn’t content with just extending its reach in the physical realm however. Despite the fact that in 2000 e-commerce was still in its infancy, the second-hand retailer was eager to stake its claim in the wild frontier of the web. “We always felt you should dream about what the future will look like, aim for it and make it happen,” Man says. “Technology was advancing and we believed this was going to be a new revolution.” Growing its digital presence from a glorified mail-order system to a fully functioning online retail platform took some work though. For some years CeX’s model relied on holding separate stock for its website at a central warehouse, something that ultimately resulted in stock being siloed between its online and retail arms. “We changed it so we don’t have any central stock and the fulfilment is done via the stores,” he says. “They just go to the website and the customer has access to our entire database, which gives them a great selection.”

Coupled with this organic growth and online expansion, CeX had its sights set on one more mechanism to help it spread its presence: franchising. However, when it first began exploring the idea back in 2001, it became clear that its model wasn’t yet robust enough to roll out to franchises. “We didn’t feel we could provide training, stability or all of the various departments you need to take care of the franchisee,” says Man. “So we weren’t ready to provide franchisees the support and stable profitability they would be looking for.” But the following four years of trading helped the future franchise firm up its model and when Kasim Ali, one of its long-term logistics managers, announced he was thinking about moving on, CeX could see this would finally give it the opportunity to launch its franchising drive. “A conversation came up where he wanted to start his own business and a little cheeky grin said he might consider something similar to what we were doing,” Man says. “So we said to him ‘look, why don’t you be our franchise pilot?’”

Over the three years that followed Ali taking the helm, CeX’s pilot store in Croydon went from strength to strength, proving without a shadow of a doubt that franchising was the right fit for the brand. However, Man began to realise that if the company was going to make the most of it, someone needed to take the lead. “There wasn’t anyone actually taking this to the next level,” he says. “At the time, there was a guy called David Mullins working with us who was a top guy so I said to Bob: ‘Dave’s probably actually a better operations director than I am so give him my job and I’ll take franchising.’” After Man signed a second franchisee – who was the husband of CeX’s then financial director – expansion began to gather apace and before long the franchise had 12 new recruits on its hands. Although this doesn’t mean there weren’t a few learning curves along the way. “Our first AGM was a big room full of people complaining,” Man says. “But we listened to the franchisees and promised and endeavoured to improve all of the tools and services that they needed.”

On top of offering a better structure for its franchisees, CeX also gradually refined the kinds of  candidates it was looking for, coming to prize the right attitude over a background in a similar company. “Business acumen and retail management experience do help,” says Man. “But, more than that, it’s about their attitude towards the company and the business model, as well as their passion, enthusiasm and trust in us as a franchisor.” And perhaps the factor that Man came to most appreciate in a franchisee was a desire to follow the system rather than reinvent the wheel. “When I recruited them, I would always tell them: ‘Don’t try to be clever, at least for the first few years: stick to the model and I guarantee you’ll be successful,’” he says. “It took me several years just to start to understand the business so it would probably take them the same time.”

Fortunately, franchisees aren’t alone in this process: CeX is on hand to help them get a grasp on the franchise’s fundamentals. And this training is very much tailored to the individual needs of each franchisee. “We believe that whatever they need and want must be provided,” says Man. “If there’s stuff missing from the programme, we listen to our franchisees, try and identify their needs and work toward building it in.” But its not just about adding additional content to the training programme: it also allows franchisees to spend less time on areas they are already well-versed in or dedicate more time to areas they’re less comfortable with. “As you’re going along, you can tell us what you want, what you need, where you’re weak and what you’d like to spend more time on,” Man says.

Evidently this has stood CeX in good stead. While things on the high street have become increasingly rocky for larger brands – with Woolworths, JJB Sports, Blockbuster and BHS all having bitten the dust during the last decade – the second-hand retail franchise has gone from strength to strength. In part, Man feels this is just the reality of trading in second-hand goods. “New stuff is cheaper online and you have a good returns policy off the bat,” he says. “With second hand, people like to play with it, touch and feel it, make sure it works and be able to come back if it doesn’t.” But this still hasn’t stopped many of the old-school second-hand retailers going extinct and in Man’s eyes this is because they failed to evolve as quickly as their fleet-footed cousin. “Being nimble, dynamic and moving with the times is key,” he says. “We know that if you’re not going forward, you’re probably slipping backwards.”

And Cex is definitely keen to move forward: it already has global domination in its sights. “We’re big dreamers,” says Man. “So there was always a desire to go international.” And the CeX team got their chance after a meeting with Ball, who by this time had left the company and migrated to Spain. After a few beers, the conversation rolled round to the subject of Ball opening up a CeX store in sunny España and this put in place a pattern the franchise follows to this day. When the right member of staff relocates to a new territory, the franchise enters into discussions around how this could potentially spread the brand into a new country. “When you’ve got 5,000 staff, a certain number of people within that group will love travelling and that means you can just keep throwing seeds out,” says Man. “That allowed us to slowly but surely fulfil our dream of becoming a global brand.”

Many of those seeds have now germinated: CeX now has over 550 stores across ten countries, generating a network turnover of £500m. But it has no plans to stop there. “In the next few years, we’d like to be able to call ourselves a £1bn turnover organisation,” Man says. “And we’d like to become a truly global company: off the top of my head that would entail a presence in at least 20 to 25 major countries.”
In addition to spreading CeX’s reach, its co-founders are already in the process of adapting its approach to a whole range of new verticals. Already Designer Exchange stores are popping up around the country, allowing consumers to buy and sell luxury fashion accessories, while KidX is already building momentum as an online community for exchanging children’s products. And Man feels like there is no upper limit on the areas in which the brand could potentially stake a claim. “You’ve got musical instruments, you’ve got sports equipment, you’ve got fashion,” he says. “That’s where we see the future: launching further sister brands and becoming global leaders in second-hand retail.”

About the Author

Josh Russell

Josh Russell

When he isn’t tooling around on trains in a tux like the Daniel Craig of the Greater Anglia transport system, Russell spends his time living the glamourous life of an enterprise journalist, judging Digital Business of the Year at the National Business Awards and attending conferences like NixonMcInnes’ Meaning 2013. However, like all good secret agents, Russell lives a double life – in his case, as a closet revolutionary. Social enterprise, sustainable business and collaborative practices are his true passions, something that he has had plenty of opportunity to air in his features here at Elite Franchise.

Emilie Sandy

Emilie Sandy

Aside from dashing between the Cotswolds and London to shoot business types for magazines such as EF and TV stars for the Beeb, Sandy is also a visiting lecturer at a college in Stroud – not to mention a proud mother to son Freddie and daughter Fjola. She has photographed our cover stars since our very first edition. You know what they say – if it ain’t broke...

 

 

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