Interview - Stephen Murphy, chairman, Garden Centre Group

In September, former Virgin chief executive Stephen Murphy took over as chairman of the Garden Centre Group (GCG), which Terra Firma bought in March.

Stephen Murphy, chairman, Garden Centre Group - image: GCG
Stephen Murphy, chairman, Garden Centre Group - image: GCG

A month later, he was on the hunt for a new chief executive to double the business within seven years after parting company with Nicholas Marshall.

Q: What are your plans for the company's future?

A: Terra Firma are tremendously enthusiastic. They see great opportunities within the core business and in additions because what they see is a consolidation opportunity, because the industry is still so fragmented. GCG is market-leading so has the momentum to continue to increase in size and be a force for consolidation.

Q: Marshall said he didn't want to buy more centres.

A: I'm surprised he said that but they have got to be at the right place and price. Acquisition multiples have to be sensible. There's no leverage in the banking market. It's been a very challenging year for the industry.

Q: How have your sales been so far this year?

A: Figures are commercially sensitive but it's not going to be a great year - not bad, but not good. As a result of some good achievements we'll come out within the range of our forecast but at the lower end.

Q: Will Marshall's departure mean that horticulture will be less of a focus?

A: We have a very high-quality team. Credit to Nicholas Marshall but he was not the only guy at GCG. Steve Pitcher and Tim Clapp are excellent and the horticulture supply chain team are committed to a quality offer.

Q: Who will be the new chief executive at GCG?

A: They're likely to come from outside the industry because we have a good horticulture team. We are very, very aware and made a great study of the Tom Hunter years and have seen what else happened in the industry. We're not going to make the mistakes of the past but would like to accelerate growth by challenging some accepted wisdoms - to keep the horticulture credentials but do better on retail.

Q: What did Hunter and chairman Jim Hodkinson (Wyevale, 2005-08) do wrong?

A: They lost the soul of the garden centre. Having that horticulture offer we are part leisure retail experience - many customers go to garden centres and only go to the restaurant so it's become a leisure experience. At Bridgemere, people drive 40 minutes to get there for a day out. It's no good to pile it high and sell it cheap, it has to be an exciting experiential retail offer with plants, good products, hardware and gifts and with complementary items. Giftware as percentage of turnover is now in double digits but you don't want to be Woolworths.

Q: How important is value in your business plans?

A: Very important, but value is not just about lowest price, it's about having a quality experience, a quality range and quality service as well.

Q: What did not go so well for you this season?

A: The bedding season has been a write-off but restaurants have gone very well. We had 200 per cent rainfall in April to June.

Q: How did you cope with that level of rain?

A: Our team did a cracking job. We went for quality and control over margin and price. The main thing was managing the stock. I'm not worried about our buying intentions for next year, I'm just hoping there's not a repeat of the weather.

Q: Have you cut orders for bedding in 2012?

A: We're working it out now. There's no good reason for thinking the world is ending, so I didn't see any reason why they wouldn't be as normal, given our ambitions.

Q: What are your plans for concessions?

A: It depends on how they compliment our offer and whether they're aligned with our customer base. If they are, we have a great deal of scope to increase by double income from concessions. We have 2.4 million gardening club members, which gives us a great understanding of who comes to garden centres, so we can work with our concessions on what our customers look like.

Q: Where is the new growth in garden centres?

A: In home-related categories like cookware and big growth in restaurants and food.

Q: What money is available to the business?

A: There is committed finance up to £100m over five-to-seven years to buy and improve depending on what we get offered. We're acquiring property for restaurant development on some sites. We know the returns. If someone offers a very attractive garden centre at the right multiple, it jumps up investment league table.


1970s-1994: Unilever, Mars Group, Burton Group and Quaker Oats

1994-2000: Finance director, Virgin Group

2000-01: Chief executive officer, IP Powerhouse

2005-11: Chief executive officer, Virgin Group

2011 to date: Principal of his own advisory business, chairman at the Learning Clinic, adviser to Ashcombe Advisers, Virgin Atlantic chairman, Jumeriah Group board member

2012: Chairman, Garden Centre Group

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