We have checked out the three-metre-high T Rex in the lobby and eyed the giant Squishmallow bean bag in the corner of his office. Now Andrew Murphy is waving around a Fuggler, a soft furry toy with hideous teeth, button eyes that he believes will help The Entertainer in its quest for world domination.
Murphy, who spent 30 years at John Lewis, joined the family-owned toy retailer as chief executive last October, stepping in to assist Gary Grant, who founded the business with his wife Catherine in 1981 and remains a very lively presence as non-executive chairman.
For Murphy it was a leap into a different world after a lifetime at the staff-owned department store, which gave him a job after he applied for its graduate programme and sent back the rejection letter with a number of errors corrected.
Now Murphy is the new mayor of toytown – or at least deputy mayor to Grant – and has plans to fire up the jetpack and aim for infinity and beyond. In January, The Entertainer announced plans to take over the toy aisle of 870 Tesco supermarkets in the UK and Ireland this year, starting in Murphy’s home nation, Scotland.
This should put The Entertainer on track to become the UK’s biggest toy retailer by number of outlets, putting its brands Addo Play and Early Learning Centre (ELC) in front of thousands more families. In terms of sales, it will have a similar market share to Sainsbury’s and Argos, lying in joint third place behind Amazon and Smyths.
Murphy says the deal takes The Entertainer beyond its role on the “proper high street” to be “part of the UK’s most powerful retailer”. The Entertainer fully controls pricing of its products in Tesco’s aisles, acting as a shop within the shop. “We think it can’t fail to be a positive thing for us.”
And this, he says, is just the start. The Entertainer has signed a deal to supply Addo and ELC toys to up to 500 Tesco stores in central Europe, and is extending its partnership with the budget Matalan chain, where it already runs Totally Toys areas in 140 shops. The group is also trialling a partnership with Marks & Spencer, offering ELC toys in 35 stores.
Internationally, the group already sources toys for retailers in countries as diverse as Indonesia, Azerbaijan and Greece. In Canada, the group supplies own-label toys for Toys R Us, owned by the family of HMV owner and toy-industry scion Doug Putman.
“We are calling it the total toy platform,” Murphy says. “We design, source, develop, retail, wholesale, and are concessionaires for toys. We do it for ourselves and now we’re doing it for others.”
But The Entertainer’s 170 UK shops “will always be the spine of our business,” he says, adding that it has its eye on maybe 15 more locations. But the majority of growth will come from partnerships with retailers which want to sell toys but do not have the capacity to manage a complicated supply chain.
Murphy expects the first half of this year to remain tough as price rises continue to put pressure on household budgets and business costs. The rise in prices for energy and other commodities remains “above what it’s been for most of my career” despite a fall back from last year’s peak.
Another complicating factor has been a doubling in the cost of shipping goods from the Far East since attacks by Houthi rebels in the Red Sea started forcing container ships to reroute via southern Africa rather than sail through the Suez Canal.
Murphy says there is also is “some truth” in the claim made by Currys boss Alex Baldock and others that government moves including increases in the national minimum wage and business rates, plus new waste regulations, are only fuelling the inflation fire.
He was disappointed at how little help Jeremy Hunt offered retailers in his recent budget. He had hoped the chancellor would at least reintroduce tax relief for overseas tourists.
Murphy says The Entertainer can “get behind” the need to raise the minimum wage but adds: “There has to be some other relief, otherwise you’re actually being self defeating, because the reality you’ll drive out of that is shops closing.”
He says that in the longer term, businesses may be able to increase productivity using technology but not in the short term. “It basically means crocodile tears are cried when high streets look more gap-toothed than ever and retailers like Wilko and others go to the wall. All I would ask government for is a holistic approach that is even-handed, and to partner with retailers.
“If we want town centres and a sense of place to be nurtured, they need help to lower occupation costs.”
He says business rates, which are calculated on the sometimes historical value of rents for a site, no matter how busy or profitable it is, need adjusting so that those with large online distribution centres or tech hubs pay more.
The current system is “fundamentally unfair,” according to Murphy, and means retail is “basically persecuted”. He says it plays “into the jaws of [online only] global retailers who in the main care no more about the UK than any other facet of their business”.
He says retailers bring more than jobs to communities: The Entertainer, he points out, has committed to handing over 10% of profits every year to charities that provide support for local people.
It is all part of the family company’s Christian ethos, which underpins several of its decisions, such as not trading on Sundays. Murphy, who is not religious, says that once he was assured that he would not be expected to evangelise through the business, he was more than comfortable signing up.
“I actually like the fact that Gary and his family stand for something, and something positive. I worked with the John Lewis Partnership for 30 years. It would be very difficult to go from John Lewis to a business that stood for nothing.”
