Amidst retail alarm, Stanley Kalms keeps cool. He's seen it all before. It's a 1954 deal that still brings tears to his eyes. Christopher Blackhurst reports.
Listen to Stanley Kalms and the problems of the moment do not seem quite so pressing. Kalms, the 60-year-old chairman of Dixons has seen them all before - and worse. It is 43 years since he started working in his father's small photographic shop in London's Edgware Road. Today, he oversees an empire of 1,500 shops in Britain and America with annual sales of £2 billion.
Like other retailers Kalms has been hit by the recession, both here and in America; unlike them, he refuses to panic. Silo, the US chain he acquired for £240 million in 1987, is losing money at an increasing rate. Kalms's response is to call on his experience. "We have battled against and overcome those problems in the UK and we have learned how to manage costs and margins when sales are flat. I have no doubt that the benefits of this performance can be used to restore profitability in the US," is his unflappable answer to questions on Silo. The American deal was one of the three takeovers Kalms launched in the late 1980s. Two, Silo and Currys, doubled the size of his company. The third, and most audacious - a £1.7 billion bid for Woolworths - failed.
For his best, though, Kalms chooses neither Silo nor Currys. He goes back, almost to the beginning. Having decided that selling cameras rather than developing pictures was most profitable, he had branched out from his father. The move had gone well - but not that well. In 1954, aged 23, he had five small camera shops.
Then he hard that Ross Ensign, a British company that, among other things, made the Selfix range of cameras, was in trouble and selling up. Kalms was immediately interested. "They were the old roll-film type of camera, using imported lenses and shutters They had been a hot seller."
Kalms heard Ross had a buyer. undeterred, he rang up. "I spoke to the Receiver and rushed round. We got on well, so well that I bought all the cameras, just like that. He wanted to sell the lot to just one customer. I came in and made an offer for the total stock which was just what he wanted." He signed a bill of exchange - "my very first" and 4,000 cameras were his. He paid £40,000 which was "a massive amount in those days. It is hard to imagine now but it was big bucks. And I mean big bucks."
Fortunately for Kalms he did not have to find all the money at once. He was allowed to pay it back over a period of weeks. Nevertheless, he recalls, "It was a major gamble. I was taking a huge risk. In those days, nobody ever bought 4,000 cameras." He took huge advertisements in Amateur Photographer magazine and in newspapers. Within days the cameras were all sold - at an average price of £20 each. "People were queuing up. The cameras normally sold at £40 each. I'd got them for £10 and was selling them at £20."
He made an instant profit of £25,000 on his £40,000. "It was a breakthrough. It taught me an awful lot about business. Ross gave me a very dramatic learning curve." Until then, Kalms had been "no different from anyone else". Retail price maintenance was still in force and all he could do was buy and sell cameras at the manufacturers' prices. Ross pushed him into the big time.
"It was the turning-point in my career. Almost overnight, I'd gone from being a little man to being a big retailer." His profit alone was enough to enable him to open more shops. "You can't realise how much £25,000 was in those days; £6,000 could fit out a shop and fill it with stock." It was not jut the profit. "Because of retail price maintenance it was hard to have a competitive edge. Ross showed me that the way to break out of the pack was to go exclusive. It started me thinking about the private, own label business. It taught me the power of advertising and special price promotion."
As British camera manufacturers struggled to compete with the Japanese and closed down, Kalms snapped up their stock: "Every one that closed down, without exception, I bought." Then he went to Japan, met the manufacturers there and started Dixons' own label business. Even now, after the likes of Currys - "a good deal but more a matter of evolution" - it is Ross that "brings back real tears of nostalgia" to his eyes.
Chris Blackhurst is senior write on the Independent on Sunday.