Meet the CEO who is turning around Kondor’s ailing profits

The distributor is undergoing a renaissance masterminded by charismatic new boss Beatrice Lafon (pictured above) 

“We’re probably among the most profitable accessories distributor in the country and potentially the world”, says the bullish chief executive officer of Dorset-based accessories company Kondor.

Beatrice Lafon joined Kondor one year ago after being headhunted by recruitment firm Skill capital. She previously spent four years with fashion jewellery giant Claire’s (formerly known as Claire’s Accessories), and replaced Rob Haycock.

Holding court in Kondor’s lavish product showroom in Christchurch, Lafon is taking stock of her first year in the job.

Ability 

“I was awarded my doctorate because I saved brands and businesses across Europe over the last 10-15 years.

“That’s what I do – I go and help businesses that don’t perform as well as they should from the owner’s perspective, bringing new life to the company. I find new positioning, strategy and features to allow them to grow and develop.  I’ve been doing that for the past 20 years.”

“I had the opportunity to look at the business 18 months ago. Kondor was a business that was different, but not differentiated. I knew I could make a difference.

“Kondor had outgrown its way of working; it was starting to become a large firm, but needed to professionalise its ways of working to continue to grow.

“You could see that sales were growing, but not our EBITDAR. I knew I could change that.”

One of her first jobs was to reinvent Kondor. This was done through a mix of investment and the rationalisation of products and suppliers.

Around £1 million was pumped into the business to revamp the marketing department, data systems, warehousing and logistics.

She also ruthlessly cut unprofitable lines in a move she describes as “cutting off the tail” to improve the bottom line.

Lafon now claims Kondor is a UK leader in smartphone cases, and cites reputable independent analysts GfK which ranks Samsung first, Tech21 second and Kondor’s brand Case-It third.

Kondor holds the exclusive rights to distribute Samsung accessories in the UK, and also delivers Tech21 products. Kondor has also had success with its other own brands of mobile accessories.

For example KitSound is the top seller for wireless headphones, with 27 per cent of the market share, while Kit and Kitvision hold the number four spots in power banks and action cameras, respectively.

Overall, Kondor sells 17 of its own brands and has retail deals with 250 retailers, including: EE, O2, Carphone Warehouse, John Lewis, Amazon, Tesco and Argos.

Revenue has consistently improved for the past four years, but profits were always variable, so in a bid to streamline the organisation, the product portfolio was slashed from 20,000 lines to 5,000.

Over a year ago, Kondor sold products from 412 brands to 413 retail partners. This was reduced to 111 brands to 250 retailers.

“We rationalised brand portfolio, our retail portfolio and our supplier base, going down from 200 suppliers to just over 60. In doing so, we brought on bigger and innovative brands such as Google and Belkin.

This was because we changed our own brand strategy. All of this has sharpened our cost prices and enabled us to negotiate new trading terms,” said Lafon.

She likened Kondor to a juggler: “We had too many balls in the air, but we did not have the right procedures, people and practices.

“Balls were being dropped, so we were losing opportunities. The cost base was increasing as fast as our sales line therefore not delivering to the bottom line.”

The result of the Brexit referendum wiped £1 million off of Kondor’s bottom line when the pound dropped in value by 20 per cent against the US dollar.

The Brexit fallout motivated the restructure and the business knew then that it had to find a new strategy.

“Brexit had a huge impact. We had to rethink how to overcome the volatility in FX and remain profitable and still become a Pan- European leader. Developing our business overseas faster, is key to that,” said Lafon.

The changes she has made means Kondor can see future organic growth, expansion internationally and through acquisitions.

Lafon’s ambition now is for Kondor to be a pan-European leader in accessories distribution using the five key strengths of data, e-commerce, marketing, logistics and retail and distribution.

“We’ve had data for a long time, but we didn’t use it effectively. Last year, we completed the coding and reporting of that data.

“We created a fresh organisation with new ways of working, new teams, structures and setting up internal systems.”

The data software implemented by Kondor was called QlikView, which collates data into an easy to read format.

With the data, Lafon said Kondor predicted that Samsung and Apple would not perform as well as in the past due to the lack of innovations and skyrocketing prices.

“People are not replacing smartphones as frequently as before. The Samsung Galaxy S9 didn’t do that well, and neither did the iPhone X or the iPhone 8. That has an impact on everyone in accessories.

“If the device isn’t selling then less accessories are sold, and that’s a big challenge, although the longer replacement cycle will create other opportunities,” said Lafon.

“We knew from our data on pre-orders that the S9 wasn’t going to sell at the same level as the S8 and S7. It’s a combination of that, and the lack of innovations for higher prices, as the reason why  people are keeping their phones longer.”

She cites the troubles experienced by the likes of Carpetright, Maplin, New Look and Toys R Us as proof that “retailers aren’t doing as well as they were before Brexit, so the challenge to grow in the UK is pinching market share from rivals”.

Capability 

Marketing and e-commerce, Lafon says, work together proving to be vital assets to the company as they fulfilled demands of partners.

Around 19 people in its marketing department carried out 683 promotional projects for partners in 2017. The marketing capability is at such a level that creative renders of products created by Kondor are used by high-calibre partners such as Samsung.

Kondor is also an authorised dealer for Google’s eBay products and it has the responsibility of designing Google’s eBay  storefront and packaging.

The distributor manages websites for retail giants such as John Lewis, Argos and Littlewoods, fulfilling orders.

“We get the order from the customer through the retailer and fulfil it. If you bought something from John Lewis online, you would have no idea it came from us,” she explains.

From a brick and mortar perspective Kondor even creates free-standing cardboard signs for retailers. The firm currently distributes to 8,500 shops in the UK and 4,000 across Europe.

“We have strong relationships with all our partners and, because of our scale and capabilities in the our space, our average relationship with partners is over 10 years.

“Kondor is totally focused on accessories in the mobile space as evident of our portfolio.

“We are a big player in the mobile accessories category and the result of that is a highly successful and profitable company”, said Lafon.

Expansion 

Lafon eyes international expansion as a key profit driver alongside organic growth and acquisitions.

Currently, Kondor ships 88 per cent of products in the UK and 12 per cent across Europe. She wants to change the balance incrementally, targeting 20 per cent of sales to come from outside of Europe.

Kondor shipped more than 18 million units in 2017 and processed 37 million. At present, Kondor operates in 50 countries, all of Europe.

Lafon has set her sights on the US, the Middle East and China to grow Kondor into a bigger international player. It started business in the US in January and did deals for its Asian ambitions in April.

“International is an opportunity that we’ve yet to fully grasp. We have taken some of our own brands overseas. We’ve just entered the US market launching some of our brands through CES in January.

“Within three years, I want international sales to be 20 per cent of our sales, up from 12 per cent last year.

“Later this year, we will expand into Middle East and Far East after starting meaningful conversations at the Hong Kong Electronics Fair.”

“We’re a leaner and more organised machine that is ready for expansion and growth this year. One day we will be an even bigger leader in our space.”

Lafon looks back on her first year with some pride, and said: “It has been an incredible year with Kondor, and one where I’ve enjoyed every second.

“Kondor has ambitious plans ahead that will take it on an incredible vertical journey this year. It’s an exciting time for us and I cannot wait to take every opportunity presented to us.

“We will find new opportunities and fulfil our ambition to be a Pan-European leader.”