Ownership is an employee affair
Turnover: £255m
Depots: six
Employees: 600
When Steve Parfett announced in May he was to leave his business within five years and transfer ownership to his staff, no one could accuse him of chasing a retirement windfall.
“If we had sold Parfetts to a market rival we would have made a great deal more money, even at today’s prices,” he says. “But safeguarding the culture and independence of the company was more important, and staff ownership was the best way to do that.”
Parfett understands the culture of the Stockport-based cash & carry operator more than anyone, having helped parents Alan and Pat start up the company in 1980. AG Parfett & Sons has come a long way from its modest beginnings – a 25,000 sq ft warehouse in Reddish. It is now a £255m business, boasting six depots across the north of England from Liverpool to Sheffield. It has also recently moved into retail, with the addition of three convenience stores.
Parfett’s decision to retire young (he is only 51 now) created a problem often faced by family-run businesses – the lack of an immediate successor. “Both my children and the next generation of children across the extended family are too young to take over,” says Parfett. “So the family elders sat down and we started to explore the alternatives available to us.”
Reflecting on his time at Waitrose within the John Lewis Partnership in the 1970s, Parfett began to consider staff ownership. “The experience of working for a staff-owned business made a big impression on me,” he says. “Staff need to understand the values of the business – that’s certainly the case with us and without them we couldn’t have been so successful.”
He approached John Lewis with an eye to a possible joint venture. “This was before I understood the nature of the employee-ownership sector,” says Parfett. “John Lewis said a joint venture wasn’t practical but nonetheless was extremely helpful, even allocating a director for me to talk to.”
It didn’t take long for Parfett to decide that the John Lewis model – where ownership is handled by a trust – was right for his business. The advantages of an ‘indirect’ ownership mean employees don’t have to put hands in pockets to buy shares, nor are they required to take on any personal liabilities to protect the business.
Parfett does not wish to discuss sums, but says the employee trust can buy shares from the family at 20% cheaper than the two independent valuations for the business put them at.
“The process has started, but it’s by no means complete,” he says. “We’ve reached the stage where the employees now own a majority share of the business, about 55%.”
Another detail, he says, is that the price of the deal has already been determined, even though it may take up to eight years to complete. “My brother Robert and I will continue to work for the business, but any increase in value will go to the employees,” he adds.
And if the business continues to expand the way it has done in recent years, that increase in value could be substantial. The wholesaler made its long-awaited debut into convenience retailing last summer when it opened its first Local 4U in New Mills, near Stockport. In spring it opened a second store in Sutton-in-Ashfield, quickly followed by a third in Newark. The target is eight by the end of the year.
“We’re learning fast – what does and doesn’t work,” says Parfett. “Managing a convenience store brings a whole new set of challenges, like making sure the security is right and having the right number of staff on premises.”
Further growth may come through foodservice and cash & carry catering, he says, but the main emphasis of the business remains unchanged. “We have a credible foodservice business but we are still in the situation where roughly 85% of our business is to independent retailers,” he says.
“We still take great pride in only serving trade customers. The last thing an independent retailer wants to see at his local cash & carry is his customers following him down the aisle.”
Parfett is also proud of his positions as chairman of buying group Landmark and council member of the Federation of Wholesale Distributors. In those roles, he represented fellow wholesalers in the run-up to the Competition Commission’s ruling that the financial viability of the sector was not under threat.
“There’s nothing to be gained by complaining about the outcome,” says Parfett. “We are working in one of the most interesting and dynamic sectors of grocery at the moment, so we’ve got to look forward.”
Turnover: £255m
Depots: six
Employees: 600
When Steve Parfett announced in May he was to leave his business within five years and transfer ownership to his staff, no one could accuse him of chasing a retirement windfall.
“If we had sold Parfetts to a market rival we would have made a great deal more money, even at today’s prices,” he says. “But safeguarding the culture and independence of the company was more important, and staff ownership was the best way to do that.”
Parfett understands the culture of the Stockport-based cash & carry operator more than anyone, having helped parents Alan and Pat start up the company in 1980. AG Parfett & Sons has come a long way from its modest beginnings – a 25,000 sq ft warehouse in Reddish. It is now a £255m business, boasting six depots across the north of England from Liverpool to Sheffield. It has also recently moved into retail, with the addition of three convenience stores.
Parfett’s decision to retire young (he is only 51 now) created a problem often faced by family-run businesses – the lack of an immediate successor. “Both my children and the next generation of children across the extended family are too young to take over,” says Parfett. “So the family elders sat down and we started to explore the alternatives available to us.”
Reflecting on his time at Waitrose within the John Lewis Partnership in the 1970s, Parfett began to consider staff ownership. “The experience of working for a staff-owned business made a big impression on me,” he says. “Staff need to understand the values of the business – that’s certainly the case with us and without them we couldn’t have been so successful.”
He approached John Lewis with an eye to a possible joint venture. “This was before I understood the nature of the employee-ownership sector,” says Parfett. “John Lewis said a joint venture wasn’t practical but nonetheless was extremely helpful, even allocating a director for me to talk to.”
It didn’t take long for Parfett to decide that the John Lewis model – where ownership is handled by a trust – was right for his business. The advantages of an ‘indirect’ ownership mean employees don’t have to put hands in pockets to buy shares, nor are they required to take on any personal liabilities to protect the business.
Parfett does not wish to discuss sums, but says the employee trust can buy shares from the family at 20% cheaper than the two independent valuations for the business put them at.
“The process has started, but it’s by no means complete,” he says. “We’ve reached the stage where the employees now own a majority share of the business, about 55%.”
Another detail, he says, is that the price of the deal has already been determined, even though it may take up to eight years to complete. “My brother Robert and I will continue to work for the business, but any increase in value will go to the employees,” he adds.
And if the business continues to expand the way it has done in recent years, that increase in value could be substantial. The wholesaler made its long-awaited debut into convenience retailing last summer when it opened its first Local 4U in New Mills, near Stockport. In spring it opened a second store in Sutton-in-Ashfield, quickly followed by a third in Newark. The target is eight by the end of the year.
“We’re learning fast – what does and doesn’t work,” says Parfett. “Managing a convenience store brings a whole new set of challenges, like making sure the security is right and having the right number of staff on premises.”
Further growth may come through foodservice and cash & carry catering, he says, but the main emphasis of the business remains unchanged. “We have a credible foodservice business but we are still in the situation where roughly 85% of our business is to independent retailers,” he says.
“We still take great pride in only serving trade customers. The last thing an independent retailer wants to see at his local cash & carry is his customers following him down the aisle.”
Parfett is also proud of his positions as chairman of buying group Landmark and council member of the Federation of Wholesale Distributors. In those roles, he represented fellow wholesalers in the run-up to the Competition Commission’s ruling that the financial viability of the sector was not under threat.
“There’s nothing to be gained by complaining about the outcome,” says Parfett. “We are working in one of the most interesting and dynamic sectors of grocery at the moment, so we’ve got to look forward.”
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