Mike Clare - Dreams

BUY-AND-BUILD

"If you can have a bit of an angle it's even better"

Seven months on and things haven’t quite gone to plan. Clare had anticipated spending time, effort and money diverting attention from the north-west, Dreams’ principle target for 2007. Unlike competitors, such as Home Style (which trades through Bensons), Sleep Masters and Bed Shed, Dreams is not an umbrella for other brands. Whatever it acquired, the name, shop-fit, systems, stock, models, IT back-end, systems, admin and policies had to change. And like his consumers, Clare wanted a deal.

“Unless you get a real bargain – like with a car or house – it doesn’t feel like there’s as much of a point,” he says. By buying a struggling business, however, Dreams also acquired its problems and, as a distress sale, time didn’t allow the necessary due diligence beforehand. Clare found he had acquired a company that was no longer advertising its existence and where a cost-cutting approach included switching off in-store heating, which was unlikely to be popular in Scotland. The upside was that the workforce was eager for change. “They think it’s Christmas – and it is,” he said in December. “The staff are all over the moon and we’re paying them more than they were earning anyway because we have a standard rate for salespeople and managers.” He set targets for the big promotion period of January, knowing one or two stores weren’t entirely suitable and that a closure was likely.

In practice, four of the eight will be “phased out” and their staff relocated, and now only five new stores are planned, ignoring vast swathes of north Scotland where there is little opportunity. The experience has made Clare question whether he made the right decision. “We ask, could we have grown organically? We got a warehouse and some staff, but I don’t think we’d rush into another [acquisition]. It took up a lot of management time, plus expenditure on advertising, shop-fitting, recruitment. But it’s more than that with the disruption and change and other hidden costs.”

Predictably the people element was as big a challenge as any. “Dreams, like any company, has a culture and style of its own. It has ways of trading and systems – doing things differently takes more time. There was some passive resistance – we were naive to think it would be easy. Off to Bed did made-to-order whereas we like to hold a lot of stock. They weren’t into so many promotions and the staff didn’t want to open late-nights and Sundays even though we weren’t asking them to work more hours. There was also the issue that we’re an English company coming here. We’ve learned a lot and might have done things differently with hindsight.”

Scottish consumers didn’t know the brand either. While Dreams had sponsored ITV programme Heartbeat and increased its ad spend from 8.5% to 14% for six months following deal completion, Clare soon realised breaking the territory would take time.