Interview: Andy Hornby highlighting the similarities of retail and gaming
With a large chain of 1,800 high street shops that are affected by reduced disposable incomes, and a modestly sized online business that is growing at a significant clip, this is a business facing the typical challenges of any multi-channel retailer.
Except it is not a traditional retailer – it has no physical products to sell. It describes the gaming business Coral. And it also highlights just how similar the models of the bookmaking operators are to those of the typical merchant.
The close relationship between the model of the leisure operator and its retail counterparts also extends to its chief executive Andy Hornby who took the helm at Coral in July 2011 having worked at big name retailers Asda and Alliance Boots, among other roles.
“Where retail and gaming are incredibly similar is with having mature cash generative high street shops but where the vast majority of the growth is online,” he says, adding that the big challenge with building the internet side is ensuring it drives incremental growth rather than substitutes for store revenues.
Ideally he says Coral, just like the retailers, would like to attract multi-channel customers as they are more valuable: “They spend over all aspects of your business and may well therefore be more loyal customers.”
Hornby says that like retail again the key is to make sure the shops are involved in the mix – and that if a shop signs up an online customer then it should receive the credit – which he can foresee involving a code of some sort.
“We’ll see over time both retailers and gaming companies having a [identifying] code for use online and when they are in the shops. It’s not happening now but it will evolve,” he explains, having described what sounds similar to a loyalty programme.
Although there is not surprisingly a focus on building the online operation the shops remain a particularly vital cog in the Coral machine. As such Hornby says the business is opening 40 outlets per year as it continues to invest – along with its big three rivals William Hill, Ladbrokes and William Hill – in its real estate.
A cinema-style bank of screens is being installed into its shops to replace the existing dated technology and touch-screens are also evident, which give access to odds from various sporting events around the world.
They could easily replace the sheets torn out of the Racing Post listing the runners and riders that are pinned to the walls each day but Hornby says he cannot see that happening just yet – without maybe leading to a rebellion among the older customers.
Self-service kiosks for accepting bets have also been installed in 25% of Coral shops alongside the fixed odds betting terminals (FOBT’s) that have been the target of some anti-gambling campaigners’ because of their popularity.
Hornby is therefore sensitive to the issue of locating new shops where there is already a concentration of betting shops: “It’s right that there is resistance if the locals have a question about [certain] shops.”
With FOBTs ongoing popularity and the increasing coverage of overseas sports Hornby says the opening hours of Coral shops now encompass 8:30am to 9:30pm (from 7am in 60 shops) six days per week and 11am to 9:30pm on Sundays.
A few years back the mere mention of sports – overseas or domestic – would have been unlikely because the bulk of gaming business in the UK was from horse racing. But today it has fallen to only 50% of the group’s total turnover. Its importance to the business has fallen as the revenues from football, golf and tennis have grown.
That horse racing and football are two of Hornby’s “passions” certainly helps him get out of bed in the morning and venture onto the tube and into work. This, along with the similarity of the business to retailing and commitment to the shareholders of Coral, explains why he says he does not expect to be returning to the retail sector any time soon.
“I love my job and the people. It’s fantastic, every morning I want to get into work. I love its large scale and multi-site, the big challenges and it is marketing-led. It feels like I’m still in retail,” he explains, adding that probably only Boots, Tesco and Sainsbury’s have more physical shops than Coral.
He clearly knows the first of those businesses very well having held the position of group chief executive for almost two years – ending in March 2011. He regards it as a great business that its chairman Stefano Pessina has built into a global operation as Alliance Boots. “He has made Boots global and it’s a fantastic story,” he says.
This is not the last of the links between Hornby’s current position and that of his previous roles as he highlights that gaming businesses are reliant on their trading floors. At Coral there is a mixture of fixed odds makers and bet-in-play odds makers (who change their odds as a sporting event evolves) located at head office who seek to balance the risk and liability of the business as it takes bets from its customers.
“It’s a risk management business that is all about probability and value. We’re rigorous with risk tolerances,” he says, which has some resonance with another of his former roles – working at financial firm HBOS.
The story of its ultimate merger with Lloyds TSB is well documented and highlights that Hornby has certainly had a varied career since taking on his first job at Boston Consulting Group in 1988 and then making his name at Asda in the late 1990s working with Allan Leighton.
But whether it is in the traditional retail sector, the gaming industry or in financial services, the one constant to date has been the retail-focused nature of his roles.
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