Net present value: a love of gizmos and sound business acumen helped Jonathan Elvidge to create a high street haven for present buyers. He tells Cathy Hayward about the rise of Gadgetshop.com. (Entrepreneur).
"I was always having trouble finding gifts for people and used to dread birthdays and Christmas," he explains. "I wanted a gift shop that sold unusual and interesting things at affordable prices." When he came up with the idea of the Gadget Shop, Elvidge was a salesman at the Hull Telephone Department, now Kingston Communications. He first discussed the idea with colleagues. "I found that other people had the same problem. But there were also people who said that if my idea was so great someone would have done it already," he recalls.
Undeterred, Elvidge spent more than a year doing research, writing business plans, remortgaging his house and raising bank finance. When the Prince's Quay shopping centre in Hull was developed, Elvidge decided it would be an excellent location and he signed up for a lease.
But things didn't run smoothly. Elvidge's business plan and finance relied on the centre opening in time for the Christmas 1990 trade. He predicted that 30 per cent of business would come in the last six weeks of the year--in fact it is now nearer 50 per cent--but the shopping centre opening was delayed. Elvidge approached the bank for more funding, but was turned down. Eventually, he secured extra funds from the small firms loan guarantee scheme (which the Sock Shop also used to get started).
The original plan was that Elvidge would stay in full-time employment and would pay staff to run the shop. By now, however, he was growing dissatisfied with his employer. He had started at the firm as an apprentice telephone engineer nine years earlier, but when his boss saw a picture of him in the Hull Daily Mail discussing the Gadget Shop, he told Elvidge to choose between his job and the new business. "It was just the impetus I needed to get started," he says. Elvidge left the firm at the beginning of 1991 and his first store opened in March.
The rent was crippling--Elvidge hadn't negotiated the lease, so he was paying a higher rate per square foot than any other retailer in the centre. But the takings were good. The store was the fourth most popular in the centre, according to a survey, which prompted retail property expert Andrew Hobbs to invest 25,000 [pounds sterling] in the firm and become a partner.
This cash enabled the business to expand and branches in Leeds and Sheffield opened in time for Christmas 1991. The following year, further branches opened in Newcastle and Bristol and the firm now has 45 outlets, including a flagship shop on London's Oxford Street.
The business has won a host of awards including the title of Drapers Record top accessories retailer in 1994 and Retail Week's rising star in 2000. Not surprisingly, Elvidge, who was voted 73rd in the list of top entrepreneurs by Enterprise magazine, turned out to be something of an Inspector Gadget himself.
When he was just 16, he won the Young Engineer for Britain award for inventing a set of kitchen scales that could be used by blind people. His interest in aeroplanes also began when he was very young and he now owns his own aeroplane complete with the latest satellite navigation technology. He often flies helicopters to visit his stores.
Elvidge's only regret is that he wishes the business had expanded quicker. "We grew at the level dictated by profits because we had a fear of banks," he says. "It's taken 10 years to open 40 shops--if we'd gone down the bank route we could have done it in half this time."
Any lost time, however, is now being made up with a host of new ideas. Gadgetshop.com (the firm was renamed in 2000 following its website launch) will be one of the first retailers to trade at 35,000 feet through a Flightstore operation with Lauda Air. The chain plans to go international by opening shops across Europe, and Elvidge has launched a store targeted at women, called Gadget Girl. Gadgetbusiness, started in September, is aimed at the corporate gifts market. Revenue is strong at 40 million [pounds sterling] last year, compared with 500,000 [pounds sterling] in 1992, and five new stores opened in time to benefit from the Christmas trade.
Elvidge attributes his success to the original, simple idea of supplying quirky but reasonably priced gifts with topnotch customer service. He also believes that his willingness to break rules has helped. The firm does not charge postage costs on web sales and does not differentiate its prices because of geography. Despite his success, he argues that he is just an ordinary person who managed to do an extraordinarything.